Millions of pounds of unspent apprenticeship funding is in danger of being diverted into the Treasury’s coffers, with many operators unaware that they can transfer a quarter of their funding to subcontractors to help pay for their apprenticeship schemes.

The warning came from Tony Higgins, MD of SP Training, a Carlisle based training provider that provides a Professional Driver Programme funded via the apprenticeship levy. SP Training's clients include Asda and Clipper Logistics.

Higgins’ warning follows a recent report from the Public Accounts Committee into the apprenticeship programme, which revealed that around £12m a month of unspent apprenticeship funds is set to be reclaimed by the Treasury starting from this month.

The apprenticeship programme, launched in April 2017, introduced a levy that requires all companies with a staffing bill of £3m or more to pay in addition the equivalent of 0.5% of this into the apprenticeship fund.

Under the rules, levy-paying companies must use their apprenticeship funding within two years or it is clawed back by the Treasury. This ruling kicks in for the first time this month, following the second anniversary of the new apprenticeship programme.

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Speaking to Higgins said: “There is a low level of awareness among levy paying logistics companies that they can transfer 25% of their funding to other firms.

“For example large organisations that use haulage subcontractors could transfer their unspent funds to these companies, which will be beneficial to them as well as their contractors by tackling the driver shortage and by raising driver standards.

“This is preferable to the funding being claimed by the Treasury since that makes the levy nothing more than a tax.”

Higgins added that there was also a lack of awareness among hauliers that there is no age limit to the Large Goods Vehicle Driver (LGV) apprenticeship.

“Although it is improving, the uptake of the LGV Driver apprenticeship is slower than expected because companies are not aware these apprenticeships are open to all ages.”

Higgins said this was particularly important to companies concerned about the insurance costs associated with employing drivers under the age of 25.

“The fact that the apprenticeship is open to all ages also means that companies can look to take on existing staff that they already know, such as their warehouse operatives, as driving apprentices,” he added.

Training fund

However, Christopher Snelling, UK policy head at FTA, said that the problem of unclaimed levy funds lies with the nature of the apprenticeships on offer.

“In logistics we are crying out for more skilled workers, in HGV driving and in engineering. And yet FTA’s members are only claiming back a small proportion of the money they contribute under the apprenticeship levy because apprenticeships are not suited to the training needs of our people or our companies," he said.

“FTA wants to see the apprenticeship levy turned into a training levy, with industry able to actually able to use the funds to enable people to join and to progress in our industry and deal with the skills shortage we actually face," he added.