Spring budget (2024)

Spring budget: IET comments to the Treasury on 23 January 2024.

Make the Apprenticeship Levy more flexible to increase UK economic growth

The IET recommends small but significant changes to the Apprenticeship Levy that makes it more flexible for employers and allows its use for reskilling and upskilling the engineering and technology workforce. This will reduce chronic skills shortages, enhance business international competitiveness, and lead to further UK economic prosperity.

We fully endorse the UK Government’s ambition for a strong and thriving economy, with world-class industries underpinned by innovation and technology. We recognise that the science and technology framework provides a strong foundation for growth. The UK requires a highly skilled workforce – and the apprenticeship scheme is a valuable way of developing engineers and technology specialists. However, Levy-related restrictions limit the potential of UK businesses.

We urge greater flexibility in the use of Apprenticeship Levy training funds by allowing unused monies to be utilised in establishing an agile skills funding pot, which is accessible for upskilling in areas of technological skill deficit.

Such agile skills development complements the apprenticeship programme, enhancing businesses’ ability to thrive in a technologically advanced and competitive economic landscape. Unused funds could train up to 280,000 extra workers in cutting-edge skills. It would reduce the current 173,000 shortage of skilled engineers, which is holding back UK growth and prosperity. 45% of engineering employers say there should be more flexibility to re-allocate unspent money. Repurposing funds to upskill and reskill employees in areas of critical skills deficit would boost the UK economy by over £1380m.