Apprenticeship Levy rethink urged as COVID-19 impacts on funding

Published:  29 April, 2020

The IMI is warning that COVID-19 could be the cause of a spike in the skills shortage in five years time, due to with employers and training providers currently impacted by the coronavirus being unable to draw down Apprenticeship Levy funding  as usual, and the organisation is urging a government rethink on usage.

The organisation  believes the drought in skills in will coincide with a surge in demand for EVs and hybrids, with these vehicles becoming increasingly mainstream over time. With this mind, a rethink by the Department for Education (DfE) is being urged  regarding the use of Apprenticeship Levy funds.  Currently, if funds automatically made by large employers with £3m or more annual turnover are not used within 24 months, they go back to the DfE.

Mark Armitage, Head of Membership Products and Services at the IMI, explained: “The problem is the current process of how Apprenticeship Levy funds are withdrawn. Funds from larger employers automatically go into a pot for use by their providers for apprenticeship training.  With that activity heavily impacted as a result of the Coronavirus though, if the 24 month rule stays in place we are going to see many firms having to stop apprenticeship recruitment and training.  If that occurs, the knock-on effect will be less apprentices coming through the system by the mid 2020s – just when all the focus will be on ramping up electric vehicle adoption and therefore the increased demand for talent with the skills to work on this new technology.

“We think there’s a simple solution to avoid this risk.  The DfE could hit the pause button on withdrawing unused Levy funds, both now and over the next 2 years, so that training providers can draw down the funding that employers have automatically paid in, once the lockdown is over and apprentices can get back to work and to their courses.”

Mark added: “The Coronavirus pandemic is presenting many challenges to the further education sector – and the DfE is working hard to try to address these.  But we think this is quite a simple solution that will at least address one aspect of the potential skills gap we will all face in the next few years.”

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