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Maximising Impact: The Apprenticeship Levy Transfer – A Gateway to Bridging Skills Gaps

February 6, 2024

Apprenticeships have emerged as a vital tool in bridging the gap between emerging industry demands and workforce capabilities. 

The Apprenticeship Levy, introduced in April 2017 by the UK Government, is aimed at large employers to incentivise the creation and funding of apprenticeship programs. Employers with an annual pay bill of more than £3 million contribute 0.5% of their total pay bill to this levy, with the intention of boosting productivity by investing in Apprenticeships. 

The levy’s primary goal is to address skill gaps in the workforce by encouraging companies to invest in training and developing new and existing employees through structured apprenticeship programs, thereby enhancing the overall skill level of the workforce in the UK. 

However, data shows that employers have utilized only about 56% of their apprenticeship levy – In February 2023 over £600m in unspent levy funds had been returned to the treasury! This underutilisation highlights a significant opportunity for enhancing workforce development through the apprenticeship levy transfer scheme. 

The Underused Potential of the Apprenticeship Levy 

The apprenticeship levy, designed to encourage employers to invest in apprenticeship programs, has only been partially utilised. According to Karly Lattimore, “Apprenticeships can go a long way in addressing the skills gap in our industry as they provide individuals with the on and off the job training needed to meet the demands of a range of roles. Building this pipeline will ensure that the industry has a steady supply of individuals with the necessary knowledge and skills to meet the ever-evolving skills needs.” 

However, Lattimore acknowledges that “whilst apprenticeships may not be right for all levy-paying employers, we would encourage businesses who do have unspent apprenticeship levy funds to engage in the levy transfer scheme, where they can support smaller businesses in recruiting and training their workforce of the future.” 

The Apprenticeship Levy Transfer Scheme: A Solution for Utilisation 

The apprenticeship levy transfer scheme is a practical solution to this underutilisation. Under this scheme, large employers with unspent levy funds can transfer a portion to smaller businesses. This not only aids in fully utilising the levy funds but also supports the growth and development of smaller businesses by enabling them to recruit and train new talent through apprenticeships. 

The Benefits of the Transfer Scheme 

  • Addressing Skill Shortages and supporting the sector: By transferring funds to smaller employers, businesses can directly contribute to addressing skill shortages within their sector and supply chain. 
  • Supporting Local Communities: The transfer scheme allows larger businesses to support apprenticeships in their local communities, fostering regional economic development. 
  • Creating Opportunities for SMEs: Small and medium-sized enterprises (SMEs), often limited by resources, can benefit significantly from this transfer, gaining access to trained individuals who can drive their growth. 
  • Enhancing Workforce Diversity: The scheme opens doors for a more diverse range of candidates to enter different industries, promoting inclusivity. 

The apprenticeship levy transfer scheme provides a fantastic opportunity in maximising the impact of the apprenticeship levy. By facilitating the transfer of funds to smaller employers, not only are we ensuring a more effective use of the levy, but we are also contributing to the wider sector and a robust, skilled, and diverse workforce. 

Do you think your business might benefit from sending or receiving a levy transfer? 

Get in touch today via https://factoryofwonder.org/contact/ or via training@bpif.org.uk 

Want to know more about how Apprenticeship funding, levy and levy transfers work? 

Watch our Youtube video covering the topic

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