Read: Co-op believes an urgent reform of the Government’s Apprenticeship Levy is still needed

Despite rising demand for apprenticeships, over £600 million was returned to HM Treasury in the last year from employers, which could have funded over 60,000 apprenticeships.

• To tackle this, 55 businesses have pledged almost £17m to the Co-op Levy Share, its own unique service which has supported nearly 1500 apprenticeships

• However, the Co-op believes an urgent reform of the Government’s Apprenticeship Levy is still needed

• A third (35%) of the 12–18-year-olds surveyed by the Co-op are more likely to do an apprenticeship now than they were 3 years ago, and for 64% of these young people the rising cost of living is making them more likely to consider an apprenticeship over other education pathways

• Over half (51%) of the young people surveyed said opportunities to develop skills was an important consideration when thinking about their future career path, while two-fifths (43%) said being able to get paid while also training was an important consideration

New research from the Co-op has revealed 1 in 3 (35%) of young people aged 12-18 are more likely to choose an apprenticeship for their career path, compared to three years ago – and for nearly two-thirds (64%) of these young people, the increase in the cost of living is something that makes them more likely to make this choice.

However, because of the current Apprenticeship Levy rules set up by the Government and their inflexibility, over £600 million was sent back to HM Treasury last year which could have funded over 60,000 apprenticeships.*

Employers can spend levy funds on supporting apprenticeships in their own operations but many, including the Co-op, find it difficult to spend all the money available to them because of inflexible rules. They can share up to 25% of their unspent levy funds, with any funds not spent or shared being returned to HM Treasury.

In response to these challenges, the Co-op created its unique Levy Share service. Almost £17 million has been pledged by 55 businesses including Greencore and BT, which has created nearly 1,500 apprenticeships, for previously underrepresented groups, with 35% of apprentices from ethnic minority backgrounds compared to 14% nationally.

The new research reveals that over a quarter (27%) of the young people surveyed believe apprenticeships are more important now than before the cost-of-living crisis. Over half (51%) of young people said having opportunities to develop skills was an important consideration when thinking about their future career path, while two-fifths (43%) said being able to get paid while also training was an important consideration.

Channelling unspent levy funds to support the creation of new apprenticeships is a positive way to create the opportunities that young people say they want and to promote social mobility.

Co-op’s flagship service, which was launched by the Co-op in 2021, enables employers across England to pledge their unspent levy which would have otherwise expired, to fund more apprenticeship opportunities for people who might otherwise struggle to find a career path.

Major businesses, including Pertemps, are among some of those who have pledged to the service. As a result, the Co-op has been able to support apprenticeships in over 70 different occupations outside of its core businesses, including care, construction and engineering, whilst also making a difference in tackling some of the underrepresentation which currently exists within apprenticeships.

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

The Co-op is suggesting that as part of a broader strategy to promote social mobility, Government should make the following changes to apprenticeship policy:

• Clear geographic targets for where apprenticeships need to be created and are most needed

• Encourage local employers to work with local government and mayors to create apprenticeships that are right for the local community

• More flexibility for employers on how they can spend levy funds to allow the actual costs of delivering apprenticeships to be covered

• An extension of the time period employers have to spend their levy funds from 24 to 36 months

• Encourage collaboration between employers to drive the growth of new apprenticeships

Co-op Group CEO, Shirine Khoury-Haq said: “Apprenticeships are one of the best tools available to promote social mobility, so business must play a central role in providing young people with an equal chance to gain the skills they need to fulfil their potential – particularly in the current economic climate.

“The Apprenticeship Levy goes some way to encouraging businesses to invest in their people, but the Government needs to better support businesses to make apprenticeships accessible to all and ensure that funding is used as effectively as possible.

“By working together, businesses and government have the potential to bring an established career and brighter future for tens of thousands of young people.”

Chair of the Purpose Coalition and former Education Secretary, Rt Hon Justine Greening said:

“Apprenticeships are a key way to level up Britain - they are a chance for those who don’t want to pursue a traditional academic route to earn while they learn as well as build a career. It’s an option that increasingly not only appeals to school leavers but to more experienced people considering a career change or a re-entry into the jobs market. It’s also a crucial way to tackle the skills shortages our country has.   

“As Education Secretary I introduced the Apprenticeship Levy reform in 2017.  Five years on, we need it updating - Apprenticeships Levy 2.0 - it makes sense for the Government to review the levy and ensure it meets the needs of business and continues to be an effective tool for social mobility for the next five years.

“As a leading member of the Purpose Coalition, the Co-op Group’s work on apprenticeships demonstrates how it successfully delivers levelling up to those communities who need it most. Its research shows that we need a plan with more flexibility and creativity in the way employers can use the apprenticeship levy to drive skills improvements. Apprenticeships are integral to a levelling up agenda and it’s vital that at the Budget next month Ministers act quickly and decisively to reform the apprenticeship levy to more powerfully close the opportunity gap that still exists for too many people across the country.”

Zafeerah Bagas, 17, 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.

“Entering the 2nd year of my apprenticeship meant that I spend more time at work instead of college. This has helped me gain more practical skills which I’ve really enjoyed. In my personal life, I’m currently working on getting my driver license so I can get a car a start driving to work.

“I feel lucky to have been given the opportunity to study this apprenticeship because I’ve found something I genuinely enjoy, instead of trying to figure out what route I’d want to take. I’m also making money while learning, which is a great benefit.”

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