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£1.28 billion sitting unused in apprenticeship accounts

A year on since it was introduced, a number of barriers are deterring employers from utilising the apprenticeship levy

More than £1.28 billion paid by employers into the apprenticeship levy is languishing unspent in National Apprenticeship Service accounts, according to new data analysis commissioned by The Open University (OU).

Just one year on from the introduction of the apprenticeship levy, organisations have paid in more than £1.39 billion but only withdrawn £108 million, the analysis found. Any funding that remains in their National Apprenticeship Service accounts will expire after 24 months.

The OU’s The Apprenticeship Levy: One Year On report warns that employers must act quickly to make the most of the fund. If organisations in England continue to use the funding at the same rate, they risk losing as much as £139 million a month from April 2019, according to The OU.

The report also found that three in ten (30%) business leaders who have accessed the funding said that the process was more time consuming than they expected.

It revealed that even though the majority (92%) of levy-paying organisations agree with the apprenticeship levy in principle, more than two in five (43%) would like to see some changes, citing a number of other barriers that are deterring employers from taking up apprenticeships.

Employers are also concerned about the resource required to develop an apprenticeship strategy (15%) and to research providers and programmes (16%). One in 10 (11%) said that management of the apprenticeship process requires resource equivalent to a full-time job - a cost they simply cannot afford.

The rigidity of the levy was found to be another major concern, with one in three (32%) calling for more flexibility in apprenticeship content. In response The OU has called for the introduction of 'modular apprenticeships', allowing employers to tailor training by adding additional learning modules to ‘core’ apprenticeships.

David Willett, corporate director at The OU, said: “With such a huge amount being paid into the apprenticeship levy, it’s essential that employers in England get return on investment by embracing apprenticeships.

“While it’s encouraging that the majority of business leaders agree with the levy in principle, it’s clear that adjustments are needed to make the levy work harder for employers. The lack of flexibility needs to be urgently addressed to ensure that organisations get value for money, and we think that modular apprenticeships, which allow organisations to develop tailor-made programmes that fit their specific needs, could be an attractive solution for both employers and the UK government.”