New Chancellor should deliver on commitment to Apprenticeship Levy reform

Writing in the Financial Times in June, Javid said “I will broaden the apprenticeship levy into a wider skills levy, giving employers the flexibility they need to train their workforce, while ensuring they continue to back apprenticeships.” The REC agrees that a broader, more flexible, levy is needed to open up training opportunities for temporary workers while also continuing to support apprenticeships.

Earlier this month the REC launched a petition calling on the government to introduce reforms to create a flexible training levy. This would enable as many as 960,000 temporary workers to benefit from better skills training using the levy funds their agencies pay to the Treasury.

670 REC members already have at least £104 million of Apprenticeship Levy funds between them going unspent, because it can’t be used to support the temporary workers on their payrolls. The REC Report on Jobs shows that there are skills shortages in areas that training temps using levy funds could help to address, like hospitality, and health and social care. Courses which could lead to significant pay rises and higher productivity would be unlocked if money paid for the Apprenticeship Levy could also be used on other high quality qualifications as part of a skills levy.

Sophie Wingfield, Head of Policy and Public Affairs at the Recruitment and Employment Confederation said:

I would like to offer a warm welcome to Sajid Javid in his new role as Chancellor of the Exchequer. Javid takes over at a critical time for business and we look forward to working constructively to make the case for brilliant recruitment as a driver of prosperity. 

Javid’s recognition of the need to reform the Apprenticeship Levy is especially welcome. The Levy was implemented with the best of intentions but could help benefit the progression opportunities for many more workers if it could be used for broader training. We would welcome working together to end the scandal of locking-out temporary workers so that critical industries facing skills shortages, like hospitality and social care, can access the talent they need.”

At a time when our JobsOutlook data shows employers remain cautious amid political uncertainty, Javid could share some of that optimism and ‘can do’ spirit by ensuring businesses can access the talent they need.”

See below a table of skills shortage areas and the training that could be funded by a reformed levy to ease the demand.