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Small businesses miss out on millions in Apprenticeship Levy funding

Apprenticeships offer an opportunity to plug skills gaps, but many small businesses are still missing out.

Research by professional services network Grant Thornton for National Apprenticeship Week (7-13 February) found that all but one (600 of 601) of the UK's mid-sized firms surveyed use apprenticeships to develop their people’s skills.

Many smaller businesses, however, are missing out on the benefits of apprenticeships, even though the apprenticeship levy is specifically designed to support them.

Last year, for example, small companies missed out on more than £250 million of funding that could have been spent on training new workers.


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The funding, raised by the Apprenticeship Levy on companies with a pay bill of more than £3 million, represents the amount that could have been given to small-business apprenticeships under the ‘levy gifting’ scheme, but was instead returned to the Treasury.

Companies that pay the levy can choose to transfer up to a quarter of their levy funds each year (including the 10% government top-up) to other businesses to pay for their apprenticeship training and assessment.

Neil Jones, business development manager at IDM engineering, a small business that has benefitted from the scheme, said the gifting scheme can be hugely beneficial.

Speaking to HR magazine, he said: “The benefits of levy gifting have enabled us to engage a senior member of the team, widen his skill base and knowledge and present him with a clear career path and future. 

“We were also able to employ a new apprentice who will provide a natural successor to our senior site engineer.”

Despite serious concerns being raised about the apprenticeship levy by organisations such as as the Trade Unions Congress (TUC) and the CIPD, which said in March 2021 that it had "failed on every measure", many companies are still looking to expand their training operations.

The majority (53%) of companies surveyed said they will increase the number of apprentices they take on.

The Confederation of British Industry (CBI) director of skills, Matthew Percival, told HR magazine that apprenticeships will be invaluable in dealing with the UK's skills crisis.

He said: “Apprenticeships are a great route into skilled, well paid jobs. They equip people with the technical knowledge that firms need, first-hand experience and support career progression.”

 “The skills the economy needs are changing quickly, meaning that 9 in 10 of us will need to learn something new to do our jobs by 2030.”

Rumaisa Wajid, an apprentice in professional services firm Deloitte’s Bright Start apprenticeship scheme, told HR magazine that she has found herself much better suited to learning in a professional environment than an academic one.

She said: “I’ve found that I was learning from the first day how to get to grips with working on client projects. 

“It’s all due to the opportunities my managers have given me – opportunities to speak up, share my ideas and present them to clients. 

“I’m also much better at team working and have been working with loads of different colleagues on very different projects. I feel like I’ve been given all the tools to help me in the world of work.”