Government’s Spending Review needs to tackle Apprenticeship Levy, warns FMB

The Government needs to revise its plans for a one-size-fits all Apprenticeship Levy or risk exacerbating the growing skills crisis in the building industry, warns the Federation of Master Builders ahead of the Spending Review.

The new government initiative was announced in the 2015 Summer Budget and applies to large employers across all industries to encourage them to take on more apprentices and increase their contribution to staff training.

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Brian Berry, Chief Executive of the FMB, said: “At the very time when the Government is trying to increase apprenticeship training, the proposed Apprenticeship Levy could have exactly the opposite effect unless the construction industry’s concerns are addressed.”

“The skills crisis in the building industry is already starting to bite with 60 per cent of small firms struggling to hire bricklayers and 54 per cent of firms finding it difficult to source carpenters and joiners. With a further 400,000 construction workers expected to retire over the next five to ten years, it is vital that the Government gets its training policies right.

Any apprenticeship funding reform that jeopardises the ability of construction firms to train apprentices would be a disaster. It is particularly important that the framework for apprenticeship funding facilitates training among construction SMEs, because it is these firms which train two-thirds of all construction apprentices. If they disengage in training the construction skills shortage will reach crisis point and undermine the Government’s other key ambitions, most notably to build one million new homes.”

The funding generated by the Levy would support the government’s plans for three million new apprenticeships (across all sectors) over the next five years to help develop the UK’s skills base and drive long-term productivity.

Recent Office for National Statistics (ONS) figures show a 2.2 per cent drop in construction output, expose the growing impact of the construction skills shortage. It is estimated that 224,000 construction workers will be needed in the next five years to meet expected output growth of more than 20 per cent by 2019.

Berry concluded: “The construction industry is united in its call to the Government, with 15 construction trade bodies having signed a joint submission advising that the Construction Industry Training Board (CITB) is allowed to administer the new levy and that funds contributed by the large construction firms are ring-fenced for construction apprenticeship training.

“The idea that Apprenticeship Levy contributions paid for by construction firms might end up funding other sectors of the economy is not acceptable when there is such a serious skills crisis in the building industry. Government needs to remember that the construction sector is the driving force behind the wider economy. Without a skilled construction sector the Government won’t be able to deliver its ambitious housing and infrastructure targets.”

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