Councils, business groups and education leaders have called for the extension to prevent what they call “a backwards step” that could worsen England’s skills gap.
In a letter to education secretary Damian Hinds, the Local Government Association and more than 20 signatories said losing unspent levy money would “hold employers and the workforce back and risks exacerbating the nation’s skills crisis”.
Under the terms of the apprenticeship levy the government will begin to claw back unspent levy funding this month and the funds will be redirected nationally.
This means that levy-paying employers have no say where their money is going, the letter from the LGA said.
Despite the scheme being created two years ago, the number of apprenticeship starts in England has fallen by 100,000 over this time, but the letter claims this is due to a lack of flexibility over how the funds are spent.
Signatories called for greater flexibility over how funds are spent and said they should be able to use the levy to “meet the full costs of apprenticeship programmes and administration including any necessary pre-apprenticeship training.”
Lord Porter, chair of the Local Government Association, said: “It would be a backwards step to begin to claw back unspent levy funds at this stage.
“The money raised from the levy must be used in the most effective way and we want to work with government and find effective solutions to delivering apprenticeship, driving economic growth and raising productivity for the national and local economy.”
He added: “Employers need a more flexible and effective levy to boost apprenticeships.”
The letter to Hinds said that boosting the numbers of apprenticeships will help drive local economic growth and help to reach and support disadvantaged communities.
Separate research by the LGA suggests that by 2024 a growing skills gap will result in four million too few high-skilled people to fill demand and eight million too many intermediate and low-skilled people than there are jobs.
Brian Berry, chief executive of the Federation of Master Builders, said reforming the scheme would help ease this skills shortage.
“We need radical change if we’re to offer quality training to the next generation, and one vital way of achieving this is providing a greater degree of flexibility in the apprenticeship levy system,” he said.
A Department for Education spokesperson said: “The apprenticeship levy plays an important role in improving apprenticeship quality and we recognise that employers want and need flexibility.
“That’s why we have extended the amount of time employers have to spend their levy (from 18 to 24 months), and increased the amount of funds that levy-paying employers can transfer to other employers, from 10 per cent to 25 per cent.”
Read the Lib Dem’s enterprise and industrial strategy spokesperson Chris Fox’s blog for PF on why the government must support apprenticeships.
