National Apprenticeships Week 2024: The REC view

Apprenticeships are a crucial tool in addressing acute skills and labour shortages in various sectors, tackling economic inactivity, and unleashing productivity. If done correctly, apprenticeships can be a pathway into work - and helping people upskill throughout their careers.  

The REC believes apprenticeships are an excellent way to align skills training to meet labour market demand, but we think that there are several measures that, if implemented, can turbocharge apprenticeship signups, boost economic prosperity, and ensure a better supply of workers with the skills employers need.  Alongside addressing demand in the short term, there are also ways that Apprenticeships can be used to build up a domestic talent pipeline in emerging sectors (like AI and Green Skills) for years to come.  

Our recommendations to better strengthen the Apprenticeship Levy system 

1) Access to levy funds for training for temporary workers.

The REC has also been calling for reform to the Apprenticeship Levy (the system that funds apprenticeships) so that the scheme can work for everyone in the labour market. Under the current system, they can only be done by those with the same employer for at least one year- the time it takes to complete an apprenticeship. This means that most temporary workers working via a recruitment agency cannot benefit from the Apprenticeship Levy, despite their wages being levied to fund this. Of the one million temporary workers on assignment in the UK on any given day, around 960,000 are ineligible for Apprenticeship Levy funding. Only 2% of temporary assignments last 12 months or more, ruling out an apprenticeship for most temps. This is a massive failure, especially in a labour market with many vacancies and insufficient skilled people. 

2) Targeted funding across levels 2 - 6 to better address labour and skills shortages

According to an FOI we sent to the Department for Education (DfE) last year, £853 million of Levy funding was used on Levels 4-7 apprenticeships (equivalent to undergraduate and masters degrees). This is more than double the amount spent on Level 2 apprenticeships (£410 million).  

If we want to boost productivity and economic growth and make sure that it pays to be in work, we need people at every skill level. That will create a more sustainable talent pipeline, moving some people into work, and enabling others to upskill. The inability to use Levy funding is a significant issue in sectors with acute shortages at entry levels in the skills system and high demand for temporary workers, including health and social care, hospitality, logistics and manufacturing. Businesses want to invest in their people, but they don't have additional resources for training because of the burden of the Levy. This limits training opportunities and exacerbates skills shortages further. 

3) Flexing the Levy to fund high-quality, modular, practical courses.

Allowing the Levy to fund shorter courses in sectors with severe shortages is an easy way to engage those not currently in work and introduce them into the labour market. This type of training should include high-quality, modular forms of training (e.g. forklift licence acquisition courses, teaching assistant training, certificates in healthcare support services etc). This will enable people to upskill and be able to move on quickly.