Manufacturers missing out on £2.5bn of funding

27-Feb-2019 - Last updated on 27-Feb-2019 at 09:40 GMT

Manufacturers could be leaving money on the table by not tapping into funds generated by the Apprenticeship Levy

Food and drink manufacturers are missing out on £2.5bn of support for training schemes due to a lack of understanding of the Government’s Apprenticeship Levy, according to an expert in skills.

UK employers deposited £2.7bn into the levy last year, but only 14% of that total has been accessed and reinvested in staff training development programmes.

Addie Marks of Jonathon Lee Skills Consultancy advised employers to view the monthly payments as an opportunity for companies to address their skills shortages. However, conversations with companies revealed a lack of clarity and understanding of the levy and apprenticeships in general.

“There is a widely held misconception that the Apprenticeship Levy is a stealth tax which offers no benefit to their business model,” said Marks. “Too many companies are paying into the Levy and getting nothing in return.

‘Drive business improvement’

“The Levy provides a real opportunity for employers to drive business improvement by addressing skills shortages and improving retention of key staff, which can have a significant positive impact on productivity and help the company grow.”

Marks encouraged employers to access the funds available to them, or risk missing them forever. Money paid into the Levy can be used against the total value of their contributions to fund apprenticeship schemes, but only within two years of the payment date, meaning the first contributions will be forfeit from April this year.

“Many businesses simply haven’t realised that spending can be offset against their levy contributions and they are therefore, essentially, paying for training twice,” he added.

Perception of apprenticeships

One of the biggest hurdles is changing employers’ understanding of what apprenticeships are. Research by Jonathan Lee Skills Consultancy has found the perception of apprenticeships was outdated.

“The term ‘apprenticeship’ can be off-putting for employers. They perceive the new system to be heavily bureaucratic, to lack access to directly relevant accredited courses and to be available only to school leavers.

“Apprenticeship Levy funds can only be used on apprenticeships, but this terminology now covers a very wide spectrum of subjects, specialisms and levels, some of which are equivalent to a Master’s degree. The Government is bringing out new frameworks and programmes on an almost daily basis and our role is to educate employers in understanding the new system and how to use it as a vital training tool.”