IMI asks government to pause Apprenticeship Levy clawback

Automotive industry professional body represents concerns of the sector as only 9% of employers believe they will sustain apprentice numbers at pre-COVID-19 level

Steve Nash, CEO of the Institute of the Motor Industry has, this week, written to Gillian Keegan, MP, Parliamentary Under-Secretary of State for Apprenticeships & Skills requesting that the current clawback applied to unused Apprenticeship Levy funds is halted for a two year period.  As the automotive industry’s largest dedicated awarding and endpoint assessment organisation, the IMI has taken the action in response to calls from its members and largest employers to address the potentially devastating impact of COVID-19 on future skills.

The IMI is currently undertaking research  amongst the largest employers in the sector to understand the effects of COVID-19 on both current apprentice employment and future apprentice recruitment plans. Whilst the research is on-going, early findings have given the IMI considerable cause for concern:

• Over a quarter of automotive retail employers (26%) have said they are unlikely to employ any apprentices in 2020
• 40% are currently reviewing their apprentice plans, with a view to significantly reducing or possibly abandoning apprentice recruitment for the rest of this year
• Only 9% say their apprentice recruitment plans are unchanged
• The IMI numbers are in line with the estimation by FISSS (Federation for Industry Sector Skills & Standards) of a cumulative loss of 119,077 apprentices across all Standards and Frameworks due to COVID-19, representing a 30% fall in numbers in 2020

With such a sharp drop in apprentice employment and recruitment, larger employers anticipate that their unused Levy funds will be taken back by government . And this will create a dearth of funding just as the sector will be emerging from the COVID-19 downturn and needing to upskill to meet the government’s low emission targets.

“The loss of the Apprenticeship Levy funding over the next five years as a consequence of the current downturn in apprentices is hugely concerning”, explained Steve Nash, CEO of the IMI.

“This will have significant implications for the organisations and extensive infrastructure that supports apprentice training in our industry, bearing in mind that automotive apprenticeship delivery requires significant investment in facilities and equipment.

“Large employers in our sector are unanimous in their view that a fixed term cessation of the Levy clawback would make a quantum difference - ideally for up to 2 years. Allowing the levy funds to accrue would, in the opinion of a forum of HR Directors representing the automotive sector’s largest retail groups, greatly assist them in justifying the continued recruitment of apprentices - given that the levy cannot be used for other purposes. The IMI has, therefore, undertaken to represent this view to Under-Secretary of State and we urgently await her response.”