Labour pledges apprenticeship reforms to tackle shortage of skilled workers

The Labour Party has unveiled more details about its plans to help businesses deal with a shortage of skilled employees.

If Labour comes to power, the current Apprenticeships Levy will be changed to a 'Growth and Skills Levy'.

Under the current scheme, employers with a wage bill of more than £3m a year are required to pay 0.5% of their payroll each month as a levy. The money can then be spent on apprenticeship training, with businesses able to transfer 25% of their funds to smaller businesses. Smaller businesses who don't pay the levy are required to pay 5% of apprenticeship costs.

Labour says it will make the scheme more flexible by allowing it to be used on a greater range of courses, such as digital and customer service skills.

Under the new system, firms will be able to use up to 50% of total levy contributions on non-apprenticeship training. Small and medium size employers who do not currently pay the levy will continue to receive 95% co-payments.

The party cited data released this week by the Office of National Statistics which showed that 47.7% of businesses had a demand for skills they were unable to get. This included 8.8% wanting advanced digital skills, 7.7% looking for basic digital skills and 13.1% of companies requiring staff with customer service abilities.

The report also found that 9.1% of businesses have had to pause trading some of their business because of a lack of workers. Based on the total number of businesses in the UK, this amounts to around 500,000 businesses.


Jonathan Reynolds MP, Labour's shadow business secretary, said:

"All good businesses know that their workforce is their greatest asset. Labour will give firms the flexibility they need to train staff and make sure our businesses can grow.

"Labour's plan to unlock the skills and talents of British workers in partnership with business will help workers improve their skills and ensure businesses can develop. It’s clear only Labour has a plan to address the skills shortages we face and get our economy back on track."

Emma Jones, founder of Enterprise Nation, said:

"We really welcome the idea of using the Apprenticeship Levy for more broad skills shortages within a business such as digital skills. Often the demands of red tape and costs, mean more rigid, long form apprenticeships aren't suitable to fill the skills gaps in micro and small businesses.

"This type of flexibility is vital if small businesses are going to get access to the skills and workforce they need to grow."

Among the other pledges for a future Labour government are efforts to revitalise high streets including scrapping business rates.