Apprenticeship levy reform could exacerbate construction skills gap

Drastic reform or abolishment of the government’s apprenticeship levy scheme will have a hugely detrimental impact on the skills gap across the construction sector, according to the University Vocational Awards Council (UVAC). 

A new report from UVAC, set to be published in June, will warn that cuts to funding of higher and degree apprenticeships will lead to a decline in skilled professionals. 

UVAC, which represents more than 90 universities that deliver higher and degree apprenticeships, has produced the white paper to set out the future of the apprenticeship levy and what a future government should consider to maintain the volume and quality of delivery of higher-level skills.

Dr Mandy Crawford-Lee, UVAC chief executive, said: “One major casualty of radical reform or abolishment of the current apprenticeship levy scheme will unfortunately be skilled professionals across the construction sector, if funding to higher and degree level apprenticeships is compromised.

“The potential election of a new government this summer, misconceptions around the amount of levy funds retained by the Treasury annually and increasing pressure from big business to scrap it completely has meant its future is uncertain. 

“This uncertainty poses a threat to the delivery of level 6 and 7 apprenticeships which are so integral to recruiting and training skilled, senior level people working across both the private and public sector. Putting levy funding at risk to those people working in construction would also hinder social mobility.”

The levy was first introduced in 2017 and is funded by a 0.5% compulsory contribution by employers with payroll costs of more than £3 million.

One possible reform UVAC has recommended is the ring fencing of public sector levy payments. According to the council, this would ensure public sector employers have greater control over where they spend their payments, regardless of whether restrictions were introduced for employers in the private sector. 

Other proposed reforms to the levy opposed by UVAC could include a graduate ban which would prevent funding being spent on young people and adults pursuing a construction-based higher or degree apprenticeship.

Crawford-Lee added: “Whether it’s reform of the current levy system or transitioning to Labour’s proposed growth and skills alternative, key consideration needs to be given to how apprenticeship funding is spent across the construction sector to ensure it can attract, train and retain the best talent.”

The new report on the future of the apprenticeship levy can be downloaded here.