- Large employers must pay 0.5% of wage bill to Apprenticeship Levy to be spent in house – or 25% gifted to fund apprenticeships elsewhere
- Mayor Rotheram and the Combined Authority have helped to transfer £2.4m to create 560 apprenticeships
- Tens of millions of pounds still unspent – and could fund hundreds of apprenticeships in city region
Mayor Steve Rotheram has called on big businesses to help fund apprenticeships at smaller firms in the Liverpool City Region – and it won’t cost them a penny extra.
Large employers are required by law to pay 0.5% of their wage bill towards an Apprenticeship Levy – which is collected by the government to fund apprenticeships.
Levy payers can spend their own allocation on in-house apprentices or gift up to 25% of the money to other organisations.
Across the country there is a national underspend of £3bn in Apprenticeship Levy funding which, if left unspent, is diverted elsewhere or recovered by government. The Liverpool City Region’s underspend is estimated to be in the tens of millions.
Mayor Rotheram has repeatedly called on government for the Apprenticeship Levy to be devolved to local areas and is now urging local employers to pledge to gift unused levy to smaller local firms, allowing hundreds of new city region apprenticeships to be created.
The Mayor and the Combined Authority have already helped to transfer £2.4m of unallocated apprenticeship levy to smaller firms creating more than 560 new training roles. For every £1 invested in apprenticeships the average return on investment is £27, meaning that the levy transfers facilitated so far have created a benefit of around £65m.
Over the past six years more than 10,000 jobs and 7,000 apprenticeships have been created through initiatives such as the Mayor’s Young Person’s Guarantee and his award-winning UCAS-style apprenticeship and careers portal Be More.
Steve Rotheram, Mayor of the Liverpool City Region, said:
“Having trained as an apprentice myself, I know the life changing impact that good quality careers advice and training can have on a young person’s future. But for far too long, our young people have been held back from fulfilling their full potential, not by a lack of talent, but a lack of opportunity – and I’m on a mission to change that.
“Currently, there is a national underspend of billions of pounds of Apprenticeship Levy funding which is diverted from the government’s stated mission to plug skills shortages. That is criminal. This is funding that could help us to change countless young lives across our region, but we need employers to work with us to ensure that this funding doesn’t just sit gathering dust in a bank account in Whitehall – or reallocated into the government’s central pot.
“By joining our Apprenticeship Levy pledge, local businesses will not only be helping to build a more robust and skilled workforce but also giving the next generation to access quality training programmes and giving them the opportunity to succeed.”
Currently, only 2% of employers – around 400 within the Liverpool City Region – are required to pay the levy.
Smaller employers – with annual salary bill of less than £3m – pay a maximum of 5% of the cost of their apprenticeship training with the government paying the rest.
Even this small contribution can be a barrier to smaller firms and charities who would like to take on apprentices.
But by accessing unused funds from larger organisations, small firms, including charities, can effectively receive 100% funding.