Government needs to act now to avoid window of lost talent in five years time

The Institute of the Motor Industry warns that reduced apprenticeship levy use now could come back to haunt automotive sector in late 2020’s

Automotive industry professional body, the Institute of the Motor Industry (IMI), is calling for an urgent rethink by the Department for Education (DfE) regarding the use of apprenticeship levy funds.  The status quo has been that if apprenticeship levy funds automatically made by large employers (£3m+ annual turnover) are not used within 24 months, they go back to the DfE. However, with employers and training providers currently impacted by the coronavirus and, therefore, funds not being withdrawn as normal, the IMI is concerned this could cause a severe drought in skills in around five years time, just at the point when the automotive sector needs to be seriously upskilling for the electric and autonomous vehicle revolution.

Mark Armitage, Head of Membership Products and Services at the IMI explains: “The problem is the current process of how apprenticeship levy funds are withdrawn. Funds from larger employers automatically go into a pot for use by their providers for apprenticeship training.  But with that activity heavily impacted as a result of the coronavirus, if the 24 month rule stays in place we are going to see many firms having to stop apprenticeship recruitment and training.  And if that occurs, the knock-on effect will be less apprentices coming through the system by the mid 2020’s – just when all the focus will be on ramping up electric vehicle adoption and therefore the increased demand for talent with the skills to work on this new technology.

“But we think there’s a simple solution to avoid this risk.  The DfE could hit the pause button on withdrawing unused levy funds, both now and over the next 2 years, so that training providers can draw down the funding that employers have automatically paid in, once the lockdown is over and apprentices can get back to work and to their courses.

“The coronavirus pandemic is presenting many challenges to the further education sector – and the DfE is working hard to try to address these.  But we think this is quite a simple solution that will at least address one aspect of the potential skills gap we will all face in the next few years.”