Flexibility is the key to unlocking success in a digital future
There is growing evidence that a technical skills shortage is contributing to this gap and holding back the UK economy. For example, in the IET’s Skills for Digital Future survey, many employers with a digital skills gap report that it reduces productivity (49%) and harms innovation (35%)1.
It is estimated that more than 80% of the UK’s 2030 workforce has already left the education system2. Moreover, the pace of technological change means that there must be a real focus on the agility of the UK workforce. Therefore, upskilling and reskilling current employees is central to closing the UK’s technical skills gap, and hence driving the innovation that creates sustained economic growth. 58% of employers report that this would have biggest impact in addressing their skills shortages3.
Upskilling the UK’s technical workforce is critical to delivering the government’s ambition for an innovative, high-wage economy and economic growth. Currently, most levy contributions are serving an important purpose by funding apprentice training, and that should continue to be fully supported. However, the opportunity to use unspent funds for upskilling and reskilling should not be missed.
Over £3bn raised by the Apprenticeship Levy has been returned to the Treasury since its introduction in 20174. In that time, the number of new apprentices has fallen and employers are spending less on training per employee in real terms5. In many cases, the levy is transferring money away from training opportunities – up to two-thirds of employers are not using their levy entitlements6, meanwhile 173,000 vacancies in the UK science, technology, engineering, and mathematics (STEM) sector go unfilled. This employment gap is costing STEM businesses £1.5 bn per year, in addition to opportunity costs7.
In 2022, the tech careers education charity, TechSheCan, ran a pilot and in just 1 month, over £1M in unused apprenticeship levy was donated by their larger members and repurposed. This is fully-funding +75 (mostly women) tech apprentices in their SME and charity members. They recognise the opportunity to solve both the critical tech skills gap whilst diversifying the tech talent pipeline; as a community, they have an ambition to achieve 'zero waste', collectively.
By expanding an existing job-training funding mechanism, the recommendation to broaden the levy could be delivered at pace, without the need for further legislation. Reforming the levy and allowing employers greater flexibility to spend leftover funds on training their employees with the right skills at the right time would support growth, innovation, agility to adapt to new technologies.
You can read more about the IET’s call for reform in our representation to the budget or tell us what you think at policy@theiet.org.
1. IET Skills for a Digital Future Survey, 2023
2. UK Skills Mismatch2030, Industrial Strategy Council, 2018
3. IET Skills for a Digital Future Survey, 2023
4. Over £3 billion in unspent apprenticeship levy lost to Treasury ‘black hole’ new data reveal | IPPR
5. https://learningandwork.org.uk/resources/research-and-reports/learning-at-work-employer-investment-in-skills/
6. "The apprenticeship levy – an untapped opportunity?” – report by Evolve Learning Group Ltd / West London College, 2017
7. STEM Skills Indicator, STEM Learning, 2018
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