New data has revealed that over £3bn in apprenticeship levy funding in England is currently sitting untouched in accounts, with companies using just 14% of available funding.
Citing figures obtained by The Open University through a Freedom of Information request, London Loves Business states employers have earned back only £480m of total funding that was made available from May 2017.
So far, just 19% of levy-paying companies have made commitments to apprenticeships; among these, many report frustrations with the system.
A study carried out by The Open University reveals most employers (94%) support the apprenticeship levy in principle, though 42% want to see changes so that it works more effectively for their company.
Though 22% of companies say they haven’t had the time to develop an apprenticeship strategy, many say the process for acquiring funding has put them off. Two-thirds (66%) called the system confusing, with 36% wanting more guidance and 35% stating they’d like the process to be simplified.
Other employers believe the current apprenticeships aren't flexible enough to meet their needs, with just over a third (34%) wanting to see a departure from rigid standards.
While the chancellor has unveiled a review of the system, changes being made to resolve certain teething issues have raised concerns among employers. Six in ten companies are worried that the government has changed bands for funding, while 57% admit they don’t feel able to make long-term strategic decisions due to inconsistencies.
This research also shows, however, that companies embracing the scheme are reaping the rewards. Among those employing apprentices, 27% said it has been good for their company and 20% say that it has already brought significant benefits to the business.
From April this year, the government will begin to absorb any unused funding at a rate of almost £120m per month. While the Department for Education will channel this surplus funding into skills and training, it’s the final chance for companies to utilise it in order to fill their own skills gaps and future-proof their business.
David Willett, corporate director at The Open University, explained that companies are missing out on a ‘golden opportunity’ to fill skills gaps and make sure they have the ability, agility and knowledge to handle future challenges.
“The lack of consistency from tweaks to the levy system and funding bands is having a profound effect on organisations, leaving many unable to make long-term strategic decisions about training and skills,” he noted.
Willett concluded that with so many companies expected skills shortages, “it’s crucial that they make use of the levy and invest in training to ensure that their organisations remain strong and competitive in future.”
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