More than a third of apprenticeship training providers with a non-levy government contract have stopped or significantly reduced the recruitment of apprentices for smaller employers due to a shortfall in funding.

According to a new survey by the Association of Employment and Learning Providers (AELP), a similar proportion of all survey respondents – including providers with and without government funding contracts – say they cannot meet demand for apprenticeship training, due to a growing shortfall in funding from the apprenticeship levy.

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Apprenticeship funding allocations

The organisation says providers are now on average turning down approaches from 40 SMEs each, due to their non-levy employer funding allocation running out. This means up to 40,000 small businesses could be adversely affected by the shortfall.

AELP chief executive Mark Dawe said the fact that the levy was running short of funding showed how popular apprenticeships are and that the apprenticeship levy should not be abolished. He added, however, that it was “totally unacceptable for both small businesses and young people that so many of them can’t start apprenticeships because of failures in how the levy funding system works and this is why it needs reform”. 

“Brexit requires us to meet employers’ skills needs by training more home-grown talent but many training providers have given up ‘selling’ apprenticeships to SMEs when the lack of funding means that there’s no point in doing so," he said. " In the meantime, there’s a big government advertising campaign telling employers that support is still available.

“The prime minister promised in July that he would ‘properly fund’ apprenticeships and the education secretary has said that the programme’s funding would be a matter for the spending review.  As the clock ticks, thousands of young people are hearing about the success stories of their peers who have been on an apprenticeship and they can’t understand why the same opportunities aren’t available for them.”

Building skills

AELP has called for the restoration of the £1.5 billion apprenticeship budget that was available to SMEs before the levy was introduced in April 2017. 

A Department for Education spokesperson said: “The apprenticeship levy means more money is available than ever before for training, giving employers of all sizes the freedom to invest in the skills they need. This year we have increased investment in apprenticeships to over £2.5 billion, double what was spent in 2010-11 in cash terms. 

“To support smaller employers to take advantage of the benefits apprentices can bring to their business, from this week we are making funding available for up to 15,000 additional apprenticeship starts and giving smaller employers access to training through our digital apprenticeship service.”