9.9.2023 | Tax

Logistics industry could be missing out on millions from apprenticeship levy

Leading trade body reveals the government’s apprenticeship system is seriously letting the logistics industry down. 

Logistics UK discloses that of the £825 million paid into the levy by the industry since 2017, just £250 million has been able to be accessed.

The levy, which came into force in April 2017, requires businesses with an annual wage bill of more than £3m to put the equivalent to 0.5% of their payroll costs into a training fund.

The money can then be accessed to fund a number of training schemes aimed at both retaining and attracting talent to help tackle the UK’s labour shortage issues.

However, a recent Logistics UK survey showed that, over the past five years, only 4% of levy-paying employer accounts were able to fully utilise the funds available to them.

Logistics UK deputy director of policy Michelle Gardner said:

 “Our latest report found that the total estimated amount of funding possible to be recovered by businesses in transport and logistics since the levy was introduced was £250m.

 “However, during the same period, the sector paid £825m in levy funds.

“This is unacceptable – especially considering the current economic climate – and highlights the urgent need to overhaul the Apprenticeship Levy, especially if the industry’s long-term skills shortage is to be resolved.”

The barriers seem to be related to very rigid rules about who and what can be funded.

Beatons Director Nick Marshall said: “Although a high number of logistics businesses are interested in taking on apprentices, the problems crop up when the requirements are looked into in more detail. There are minimum skill levels and minimum durations of the apprenticeships allowed, for example.

“On top of this, certain business size specifications can halt uptake of the scheme, it seems.

“This is a huge shame and a real problem for the industry, as it’s clear that most businesses are keen to grow and tackle the labour shortages but are being restricted.”

Now, Logistics UK is calling for an overhaul of the system, with Michelle Gardner adding:

“Since 2021, Logistics UK has been highlighting to the government the need for the current system to be replaced with a more flexible Training Levy to enable realistic training and development programmes for new recruits.

“The industry itself is working hard to fill skills gaps and introduce the next generation of workers; however, it is now vital that the government responds accordingly to remove the barriers and ensure a continued skilled workforce is available to keep the UK economy supplied with everything it needs.”

Nick Marshall said: “Finding ways of funding growth within business is vital, especially when those businesses are contributing to a fund which should help them to do so.’

You can find out more about accessing the levy, here.

For help and advice on any accounting needs, contact Beatons at info@beatons.co.uk or 01473 659777