More than £1.28bn of the funding that has been paid into the apprenticeship levy is languishing in National Apprenticeship Service accounts as organisations in England struggle to find their footing, according to new data analysis commissioned by The Open University.
Analysis of data from the Education and Skills Funding Agency acquired through a request under Freedom of Information Act reveals that one year on from the introduction of the apprenticeship levy, organisations have paid in more than £1.39bn but only withdrawn £108m. This slow start could cost organisations in England dearly, as any funding that remains in their National Apprenticeship Service accounts after 24 months will expire.
Today, The Open University’s new report – The Apprenticeship Levy: One Year On – warns that employers must pick up the pace. If organisations in England continue to use the funding at the same rate, they risk losing as much as £139m a month from April 2019, which could otherwise be used to build skills, attract and retain staff, and increase efficiency.
A year is not a long time considering it can take up to nine months to get an apprenticeship programme up and running. According to market research commissioned for the report, three in 10 (30 per cent) business leaders who have accessed the funding said that the process was more time consuming than they expected, so employers need to ensure they do not underestimate the time required.
Even though the majority (92 per cent) of levy-paying organisations agree with the apprenticeship levy in principle, more than two in five (43 per cent) would like to see some changes, as there are a number of other barriers that are deterring employers from taking up apprenticeships.
Employers are concerned about the resource required to develop an apprenticeship strategy (15 per cent) and to research providers and programmes (16 per cent). One in 10 (11 per cent) even said that management of the apprenticeship process requires resource equivalent to a full-time job; a cost they simply cannot afford.
However, the most significant barrier preventing organisations from taking up apprenticeships is the availability and flexibility of programmes. One in four (24 per cent) business leaders agreed that apprenticeship standards – which define programme content – need to be approved more quickly by the Institute for Apprenticeships, as the current delays limit the training options available to them.
The rigidity of existing standards is a much more pressing concern for employers, with one in three (32 per cent) calling for more flexibility in apprenticeship content. The centrally agreed standards do not allow employers to adapt apprenticeships to fit their specific skills needs, which can vary dramatically by the sector, objectives and size, and prevents organisations getting the best value from their investment.