Use or share apprenticeship levy funds, employers urged

With the deadline to use unspent apprenticeship levy funds fast approaching, employers should review their skills needs or share their funds with other organisations, a business school has urged.

The first tranche of levy funding is due expire in April, but more than £3bn remains unused by employers. According to the National Audit Office (NAO), only a tenth of apprenticeship levy funds available have been accessed.

Alliance Manchester Business School said employers face the choice of either: using the levy for what it was intended; sharing funding with partners, suppliers or local firms; or simply “losing funds to the Treasury each month”.

Employers can currently transfer up to 10% of their allocation to a third party. This will  increase to 25% from April.

Stuart Wells, executive director of client relations, said: “The ability of organisations to share funds, could add fuel to UK growth, job creation and our entire country’s future readiness. With the UK facing a skills and management shortfall – I would urge businesses to use or share expiring funds before it’s too late.”

He claimed confusion and criticism of the levy meant organisations had not had enough time to use all the funds in their levy account, while many had to adjust their processes to enable them to do so.

In a report published during National Apprenticeship Week, the NAO recommended the Department for Education to consider prioritising certain types of apprenticeship to deliver better value for money.

The report claimed organisations are using the levy fund more costly apprenticeships at levels 6 and 7, which has resulted in a reduction in the total number of apprenticeship starts.

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Sir Cary Cooper, professor of organisational psychology at Alliance Manchester Business School, advised employers to use the funds to train managers and “address a business issue that many firms simply hadn’t pinpointed”.

“Poor management is the single largest factor underlying lagging UK productivity. Here, senior management training provides an opportunity to reshape leadership across the country in a way that invigorates and equips businesses, managers and workers for a much brighter future,” he said.