Plugging the skills gap: Reforming the apprenticeship levy to grow a green economy

Mitie apprentices being trained by a supervisor

For all too long, higher education has been synonymous with attending university and achieving a degree. However, as someone who has risen through the ranks to become Chief People Officer of one of Britain’s biggest employers, in part by being able to study while working, I’m proud to see a rise in status for ‘earn and learn’ qualifications, such as apprenticeships. By evolving the Levy to be more flexible to employers’ skills needs, apprenticeships can create more opportunities and be an accelerating force for the UK’s economy and skills workforce. 

The benefits of apprenticeships are clear. While for every £1 spent on further education qualifications, the return on investment is around £20, for apprenticeships this is on average £7 higher, at £26 - £28. Yet apprenticeships are still not living up to their full potential as a growth driver – for learners, British businesses, and the UK economy.  

Apprenticeships help provide a key talent pool for Britain and boost the UK’s productivity and economic growth, with each year’s cohort contributing almost £700m a year to the UK economy. Employers are, however, facing barriers to helping prospective apprenticeships reach their true potential because of the current ‘use it or lose it’ Apprenticeship Levy approach. A total of £3.3bn of unspent Levy has been returned to the Treasury in the last three years — that’s all money that could, and should, be spent equipping our workforces with the skills we, as a British business, need for the future.  

The Levy must work better for everyone. Sensible reforms to the Levy could dramatically increase the number of people it can support. Last year, 337,140 people started an apprenticeship in England — down by 4% from the previous year. However, only around half (48%) of those actually went on to finish or ‘achieve’ their apprenticeship. Whilst the appetite for apprenticeships is there, this figure serves to demonstrate that something in the system is not quite working. 

As a 2023 Top 100 Apprenticeship Employer, with at least 1,100 apprentices in our business at any one time, Mitie knows firsthand the value of apprenticeships in building a future-ready talent pipeline to meet industry needs and challenges. Apprenticeships enable our colleagues to hone valuable technical skills to support our customers and the UK’s economic growth at the same time as earning a wage. With an apprenticeship-first approach to training, we know first-hand what works and what needs fixing.  

The opportunity is even clearer for the UK’s growing decarbonisation agenda — the UK’s ambitious net-zero targets are dependent on the nation having the skilled workforce to deliver it. While it’s easy to just focus on those at the start of their working lives, it’s vital that apprenticeships, and the Levy, work for people at every stage of their career to help the nation plug its green skills gap and help our colleagues develop long-term, fulfilling and sustainable careers.  

In the last decade alone, Mitie’s team of more than 1,000 decarbonisation experts saved 26,600 tonnes of carbon for our customers in the Financial Year 2023 — the equivalent to the annual CO2 emissions of 3,284 UK homes. This has covered everything from energy buying to green building retrofits, solar panel installations, grid connections and EV charge point installation. None of this would be possible without our skilled colleagues, but as demand for their services increases, so too, does the need for training to develop this expertise.   

From Edinburgh to Essex, we have colleagues up and down the country willing and able to adapt and expand their skillset to move up in their careers while also supporting the demand for decarbonisation. We want to use apprenticeships to upskill this workforce, empowering colleagues, both those starting out and the more experienced, to take the next step in their careers by developing new skills and gaining qualifications.  

Likewise, there are many opportunities to reskill our current workforce who have highly relevant transferable skills, so that they too are prepared for the future. With over 80% of the UK’s 2030 workforce already working today, reskilling isn’t just a nice to have, it will be a critical component to achieving the UK’s net-zero ambitions.  

Both of these challenges of upskilling and reskilling Britain’s workforce can be resolved by reforming the Apprenticeship Levy to allow learners who may already have relevant skills to complete shorter courses that are more appropriate than the 12-month apprenticeship minimum.  

A clear example of this is demonstrated by the Government’s heat pump installation target. The UK needs an estimated 150,000 installers to meet its target by 2028. However, there are currently only 3,000 qualified heat pump installers. Meanwhile, the UK has over 140,000 qualified gas engineers who, with the right training via a short course, could quickly be able to pick up the baton, becoming qualified to install and maintain both gas boilers and heat pumps. Likewise, colleagues with electrical engineering experience don’t need to complete a full apprenticeship to add solar panels to their repertoire.  

Ahead of National Apprenticeship Week next week and the upcoming Spring Budget, Government must consider reforms to the Levy so that this funding can work better for everyone – colleagues, employers and the UK industry.  

British industry can help deliver increased productivity, skills and growth, but we need the policy levers to do so. This must start with the right skills Britain needs to build our future, and reforming the Apprenticeship Levy is the key to unlocking that potential. 

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