UVAC warns of threat to region’s skills gap posed by apprenticeship levy reform

A new report by the University Vocational Awards Council (UVAC) has warned that drastic reform or the abolishment of the government’s Apprenticeship Levy scheme will have a hugely detrimental impact on the skills gap across the South East.

Cuts to funding of higher and degree apprenticeships that are so critical to training core sectors and occupations such as digital, engineering, finance and manufacturing to a senior level will lead to a decline in skilled professionals. 

The warnings come from UVAC, which is the voice for over 90 universities that deliver higher and degree apprenticeships. It has just produced a white paper setting 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, chief executive for UVAC, said: “One major casualty of radical reform or abolishment of the current apprenticeship levy scheme will, unfortunately, be skilled professionals across a range of sectors in the region if funding to higher and degree level apprenticeships is compromised.

“The potential election of a new government later in the year, 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 sectors.

“Putting levy funding at risk across a range of professions and occupations would also hinder social mobility and widen the skills shortages already felt in core sectors across the South East, such as finance and engineering.”

The levy was first introduced in 2017 and is funded by a 0.5% compulsory contribution by employers with payroll costs of over £3m. It was met with some concerns, especially from levy-paying organisations, regarded as another form of business taxation and has recently come under heavy scrutiny. 

One possible reform UVAC has recommended in its new report is the ring-fencing of public sector levy payments. This would ensure that employers, such as the NHS, would have far greater control over where it spends its 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 across the South East pursuing a degree apprenticeship to reskill and upskill in and through work delivered by higher education providers.

Mandy 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 all sectors, occupations and professions to ensure it can attract, train and retain the best talent.”

The new report on the future of the Apprenticeship Levy will be freely available to view online from 1 June.

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