A part of the post-lockdown recovery is ensuring potential employees have the necessary skills to find employment. Apprenticeships are essential for developing such a skilled workforce. However, local authorities seem reluctant to make the necessary investment.

Freedom of information requests collated by the start-up Multiverse have revealed that there is £111m worth of Apprenticeship Levy currently unspent across 140 English councils. This is enough to create more than 10,000 additional apprenticeships at around £8,655 each.

Why are local authorities reluctant to spend this money? With all the talk of ‘building back better’ and ‘levelling up’, you would think training was a priority. Why are local authorities holding back?

Before answering this question, it’s important to understand how the levy works. Introduced by the Government in 2017, the levy is paid by all employers with a pay bill of over £3m per year. It is set at 0.5% of the value of the employer’s pay bill, minus an Apprenticeship Levy allowance of £15,000 per financial year.

Employers who pay the levy will be able to draw on the levy fund to finance training costs, while employers who do not will pay 10% of the cost of training with the Government contributing the remaining 90%. Councils don't just have to spend it on hiring young people. They can also use it to upskill existing staff or transfer levy to charities, local businesses, or their supply chain.

One local authority that is making the most of the levy is Westminster City Council. Between 2017-2021, the council had 333 apprenticeship starts (against a four-year public sector target of 291). The numbers have picked up more in the past two years with 143 starts in 2020-21.

‘Apprenticeships are a fantastic way to support staff development and bring in early career talent into the organisation. They offer the opportunity to upskill, cross-skill, reskill staff and enable organisations to fill skills gaps and prepare for future skills needs,’ Swati Bisht-Rawat, talent development lead at Westminster City Council, told LocalGov.

‘They’re also a great way to help staff access development and professionalising opportunities that would normally be too expensive for departments to afford. For local authorities it’s a great way of hiring fresh talent especially local residents and offering them a platform to develop skills and become work ready.’

Westminster City Council is not alone in seeing the advantages of apprenticeships. According to data published by the Local Government Association (LGA), councils have so far invested more than £200m to create over 55,000 apprenticeship starts in 150 different qualifications over the last four years.

Founder and CEO of Multiverse Euan Blair is also a keen advocate of apprenticeships. ‘Digital transformation, improving the diversity of their workforces, and supporting the local economy are top priorities for many of the councils we speak to,’ he told LocalGov. ‘Apprenticeships are the perfect way for them to reskill people in vital new technologies like machine learning and software engineering; bring in diverse cohorts of future leaders with the right skills mix up-front; and create high-quality local jobs. Thanks to the Apprenticeship Levy, it's possible for councils to make an enormous impact without needing to identify new funding streams, and in the process achieve their strategic priorities.’

Despite the potential of apprenticeships, however, there are signs that not as many are being created as could be. Apart from the £111m of unspent levy, data from the cross-party group London Councils shows a reduction in the number of apprenticeships London boroughs created in 2020-2021 (3,137) compared to the previous financial year (3,693). While this decrease was partly due to COVID-19, London Councils argues it was also due to systemic flaws in the Apprenticeship Levy.

‘Apprenticeships are hugely important for providing opportunities to gain work skills and experience, which is why London boroughs are so keen to support apprenticeships,’ said Cllr Nesil Caliskan, London Councils’ executive member for skills and employment.

‘However, unnecessary barriers to using Apprenticeship Levy funding means boroughs and other London employers aren’t able to offer as many apprenticeships as we’d like. The Apprenticeship Levy isn’t working – the way it’s set up is a hindrance to maximising apprenticeship numbers.’

London Councils has a number of proposals which they say will improve the Levy. The group is urging the Government to temporarily extend the amount of time employers have to spend their levy from two to three years. They also argue that employers should be able to use levy funding for pre-employment training to get people ready for an apprenticeship. Finally, they are calling for allowing levy-paying employers to use some of their levy to contribute towards the wage costs of new apprentices from priority groups.

‘We’re working with London’s business community to make the case to the Government for reforming its policy and enabling the sort of flexibilities that will secure much better results for everyone,’ Cllr Caliskan added. ‘In the context of trying to secure a post-COVID economic recovery, this is more urgent than ever.’

While the Apprenticeship Levy might need reforming, local authorities themselves have to be willing to make their own changes. The narrative around apprenticeships needs to change, Westminster City Council’s Ms Bisht-Rawat says. ‘The success stories of apprentices need to surface more so people realise what an asset apprentices can be and how they are not just young people doing odd jobs.’ A culture change is needed.

‘We’ve found that our own journey in culture change has enabled us to utilise the apprenticeships in the way we have,’ Ms Bisht-Rawat explains. ‘Creating an environment where development is supported and encouraged is at the heart of this. And it needs to flow through the organisation, from leaders to team members. Apprenticeships are an intensive commitment for organisations, leaders and apprentices, but as they say “nothing worth having comes easy”. So perhaps it’s also an opportunity for councils who are wanting to embark on a culture change journey of their own?’