25,000 Missed Opportunities to Level Up through Apprenticeships

07 February 2022

• 30 businesses have pledged over £8m to the Co-op Levy Share, its own unique service
• The service is set to support almost 1000 apprenticeships this year
• However, an urgent reform of the Government’s apprenticeship levy is still needed
• 40% of young people want to be an apprentice, yet entry level apprenticeships have declined 25% since 2018

Almost eight million pounds has been pledged by over 30 businesses to the unique Co-op Levy Share service, which will create almost 1000 apprenticeships and help plug the opportunity gap for underrepresented groups.

The flagship service which was launched last year by Co-op enables businesses across England to pledge their unspent levy which would have otherwise expired, to fund more apprenticeship opportunities for people, who would struggle to find a career path.

Major businesses including Mastercard and Direct Line Group are among those who have pledged to the service so far. As a result, the Co-op has been able to support apprenticeships in 35 different occupations outside of its core businesses, including care, construction and engineering.

However, due to the way in which the Government governs the Levy and its inflexibility, millions of pounds are being left unspent by businesses every month.

Currently businesses can only share up to 25% of their levy funds, with any funds not spent or shared being sent back to HM Treasury. As a result, last year alone, over £250 million was sent back to HM Treasury which could have funded over 25,000 apprenticeships.¹

In response to this and as a major champion of apprenticeships Co-op is calling for an urgent reform from Government on the apprenticeship levy asking that it is made more flexible and that the 25% cap on amount that can be shared is extended to 40%, enabling more people to benefit from apprenticeships.

In addition to more people gaining access to apprenticeships the Government should make apprenticeships accessible to everyone to Level Up by raising their profile as a pathway to a successful career.

Research from Co-op’s Ghosted Generation Report shows that whilst two fifths (40%) of young people want to be an apprentice, uptake of entry level apprenticeships across England has fallen by 25% since 2018 as businesses turn to offering higher level qualifications instead.²

The pandemic has had a catastrophic impact on young people’s education and career pathways. Almost a third (29%) of 13 to 25-year-olds feel the pandemic has made them less likely to continue with further education and over a quarter (26%) stated that their career aspirations have been ruined as a result.

Co-op is suggesting that as part of a broader strategy of Government’s levelling up disadvantaged communities, Government should make the following necessary changes to its apprenticeship policy:

1. Stronger focus on entry level apprenticeships which are a crucial ‘stepping stone’ into established career paths. Since 2018, uptake of such apprenticeships has fallen by 25%
2. Clear geographic targets for where apprenticeships need to be created and are most needed
3. Encourage local employers to work with local government and mayors to create apprenticeships that are right for the local community
4. More flexibility within and an extension on the current levy’s expiry
5. Collaboration between employers to drive the growth of new apprenticeships should be encouraged

Co-op Group CEO, Steve Murrells, said: “Business can play an important role in ensuring everyone has an equal chance to fulfil their potential, no matter who they are or where they come from.

“The current apprenticeship levy can incentivise a business to invest in its people, but the Government need to trust businesses to make apprenticeships truly accessible and ensure that opportunities are distributed fairly so that we as a country can level up.

“With changes to the apprenticeship policy and more flexibility, I know that the Co-op and other businesses could increase the number of apprenticeships each year by 40% - which would bring an established career and bright future for thousands of young people.”

Deputy Chair, Social Mobility Commission, Alun Francis said: “Apprenticeships offer a non-degree route to higher skills, and if targeted at those with high potential but fewer opportunities, can be a valuable tool to promote social mobility. Government, employers and education institutions all have a crucial role to play in ensuring the apprenticeship system delivers on this, with a clear focus on developing local skills and meeting local needs.”

Zafeerah Bagas, 16, is a Level 3 advanced metal fabricator apprentice at William Hare in Bury. Through the Co-op’s Levy Share, Levy from the UK's largest recruitment agency, Pertemps, has funded Zafeerah’s assessment and training at a cost of £27,000. Without the Levy her apprenticeship wouldn’t have been possible.

She said: “When I first left school, I was at a bit of a crossroads. I’d always been practically minded and when I was younger, I used to play with a toolbox – so that’s when I knew I wanted to get into engineering. I’m the first in my family to have an interest in engineering and my apprenticeship has provided me with opportunities I never thought would be possible. And now, my dream is to run my own engineering company one day.”

To learn more about apprenticeships at the Co-op, please visit: jobs.coop.co.uk/apprentice-hub.

ENDS

Notes to Editor   

For more information, please contact: Elliott Lancaster | Press Officer | 07808 609 944 Emily Penkett | PR Manager | 07738621201

¹ From 28th July - 10th August 2021, ICM Unlimited conducted an online survey, on behalf of Co-op, with N=5040 young people aged 10 to 25 years old in the UK. To ensure a representative sample, demographic quotas were set, and the data has been weighted back to the profile of 10- to 25-year-olds in the UK. It should be remembered that while the data has been weighted to be representative, a sample was interviewed and not the entire population.

Apprenticeship figures since 2018, taken from: https://explore-education-statistics.service.gov.uk/find-statistics/apprenticeships-and-traineeships/2021-22

²Unspent funding of £250 million was surrendered at the 2020/21 Supplementary Estimate according to DfE data

About the apprenticeship levy (taken from gov.uk) The levy is paid by large employers with a pay bill of over £3 million (they pay 0.5% of their total annual pay bill). Currently, only 2% of employers pay the apprenticeship levy. Levy paying employers access their funds through the online apprenticeship service. The funds in their accounts are available to spend on apprenticeship training in England. Employers have 24 months to use their funds once they enter their apprenticeship service account, after this point, their funds will expire. The funds expire to encourage levy paying employers to invest in high-quality training and assessment and to prevent levy payers from accruing very large balances. However, any unspent levy funds within each financial year are then used to support existing apprentices to complete their training, pay for apprenticeship training for smaller employers and additional payments to support apprentices.

About Co-op The Co-op is one of the world’s largest consumer co-operatives with interests across food, funerals, insurance, legal services and health. Owned by millions of UK consumers, the Co-op operates 2,500 food stores, over 800 funeral homes and provides products to over 5,100 other stores, including those run by independent co-operative societies and through its wholesale business, Nisa Retail Limited.

Employing over 62,000 people, the Co-op has an annual turnover of £11.5 billion. As well as having clear financial and operational objectives, the Co-op is a recognised leader for its social goals and community-led programmes. The Co-op exists to meet members’ needs and stand up for the things they believe in.

In the last ten years, more than 6,000 apprentices have worked across the Co-op, in the support centre in Manchester and the frontline across UK food stores and funeral homes. It is also working to create 150 Government Kickstart placements in communities where opportunities are most needed, based on data from its Community Wellbeing Index.