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The tech sector has always been an enthusiastic advocate for, and user of, apprenticeships, and with the government committing to level up on skills, it is time to make sure that apprenticeships work for everyone.
Data released this week showed the digital sector growing at almost seven times the rate of the rest of the economy. With that growth comes a need for new skills and talent. Apprenticeships are a key component to ensuring that the UK builds the talent it needs to power the digital revolution. Although the number of new apprenticeships may be down generally, for the tech sector we continue to see an increase, but we are far from done.
McKinsey estimates that by 2030, two-thirds of the UK workforce could be lacking in basic digital skills, while more than 10 million people could be under-skilled in leadership, communication and decision-making.
For employers, apprenticeships can provide training in these skills to new recruits, but the apprenticeship levy should also be used to upskill current employees, improving wage rates for staff, job satisfaction and retention. As we look to the future of apprenticeships and the use of the levy, we must ensure that it works for all employers and supports the needs of the current and future workforce.
Key to this will be further reform to the apprenticeship levy to make it more flexible and fit for purpose. Tech companies have embraced the opportunities brought by the introduction of the levy in 2017 and welcomed government reforms. The levy is an important part of the changes to raise apprenticeship quality and supports TechUK members to make a long-term and sustainable investment in training. But for the sector to do this, the levy must work at its best.
The bureaucracy and complexity of the levy has left funds unspent, with smaller businesses missing out. To combat stagnant apprenticeship growth in companies across the UK economy, TechUK recommends reforming the apprenticeship levy to increase the lifetime of levy funds from two to five years and increasing the transferable funds rate from 25% to 80%.
Passing on a bigger portion of levy funds means companies can help fund training in smaller companies or those in their supply chain. Businesses could then take full advantage of the levy and help as many people as possible to find the right training to equip them with the skills they need.
The latest National Apprenticeship Week campaign highlighted just how valuable apprenticeships are for apprentices and employers alike, and should re-energise the mission to making the apprenticeship levy do more than just work.
TechUK has been committed to shining a spotlight on the diversity of apprentices and what it means to be an apprentice. Industry has sought to attract people from all backgrounds and ages and show that they are an aspirational choice for anyone.
Apprenticeships should be at the heart of the strategy to level up skills across the UK and, with more flexibility, we know there is more we can do to enable businesses to reach, attract and retain diverse talent and prepare them with the skills they need.