Apprenticeship Levy “does not work” and needs to be replaced by Training Levy, says Logistics UK

The Apprenticeship Levy is “not working” and needs to be replaced with a Training Levy that is more flexible and easier for logistics businesses to access.

The call comes from Logistics UK at the end of this year’s Apprenticeship Week. The association is calling on the government to launch an urgent review, warning that without reform the industry’s skills gap will not be successfully tackled.

Jonas Keat, Logistics UK policy advisor, said: “The current Apprenticeship Levy does not work for any sectors.”

He pointed to research by City & Guilds which found that of 1,000 HR leaders, 94% reported facing at least one barrier to accessing their levy funds.

He also cited combined research by City & Guilds and the 5% Club, which shows that UK employers have spent an average of just 55.5% of their apprenticeship levy funding over the past five years.

Keat said: “Logistics UK is asking for the current format to be amended into a Training Levy which will allow more flexibility so that companies can utilise the funding available.”

The association first called for a Training Levy in March 2021, and reiterated this call in its recent Spring Budget submission.

Keat said the current system is putting barriers in the way of workers wanting to access logistics apprenticeships.

He said: “Workers currently looking to access apprenticeships are being held back by the minimum skills requirement which dictates that people can only take up an apprenticeship if they have achieved a minimum standard of maths and English.

“While this might be viable in other sectors, within logistics, skills and experience are ore essential in some roles – the industry is not a ‘one size fits all’ employer.

“Following conversations with members, Logistics UK believes this requirement is preventing a potentially valuable group of young people from joining the workforce via the apprenticeship route.

Keat said the creation of a Training Levy, to replace the existing Apprenticeship Levy, would allow companies to solve their own skills shortages in the short term by allocating levy funding for training programmes which do not necessitate a year-long apprenticeship – such as HGV driver training.

“The implementation of a Training Levy would support development at all ages from those without academic qualifications and new to work to those looking for a career change,” he added.

Keat said 99% of logistics businesses are classed as SMEs - however, apprentices aged over 18 years old who work for smaller businesses which employ fewer than 50 people, are currently ineligible for full funding.

“Paired with the requirement for a 20% minimum off-the-job training, this mismatch between available candidates and roles on offer results in a lot of valuable time being wasted in certain programmes, and highlights the inflexibility of the apprenticeship system for both employers and employees in logistics.

“Overall, there are still not enough apprenticeships being offered for logistics roles in general, and currently only Level 3 roles, such as mechanics, and above are eligible for funding through the National Skills Fund (NSF).

“We need this funding to be extended to selected Level 2 roles - such as HGV drivers and warehouse operatives - which are currently experiencing shortages.

“Our industry wants to see more collaboration with the government to address our recruitment needs, including continued support for our industry-led Generation Logistics campaign, and more relevant apprenticeships being offered.”