How can local authorities spend their apprenticeship levy?

Cash strapped councils in England are sitting on millions of pounds in unused funding which could be helping them to pay for apprenticeships.  

There are 317 local authorities across the country, directly employing more than 1.18 million people in sectors as diverse as planning, waste collection, teaching and social care. Most pay the apprenticeship levy and have built up funds to spend on training - but many are losing out because they aren't spending the money in time. 

According to latest figures from the Local Government Association (LGA) some 94% of English councils report difficulties in recruiting and retaining employees. To address staff shortages, 62% say that increasing apprentice training is among three main actions they are taking to tackle the problem. 

The LGA's statistics from August 2024, show apprenticeships to be a popular option among councils - but they also suggest local authorities could be using them more.  

Use it or lose it 

All employers with a wage bill over £3 million a year have to pay the apprenticeship levy. The levy is charged at 0.5% of the annual wage bill, minus a £15,000 allowance. It's then collected by HMRC each month and transferred into a National Apprenticeship Service (NAS) account to spend specifically on apprenticeship training.  

But local authorities only have 24 months to spend this money. If they don't, the funds expire and are returned to central government to be distributed among small and medium sized businesses.  

How can local authorities make the apprenticeship levy work for them? 

Local authorities can use their levy funds to pay for any apprenticeship training - either to recruit new staff or upskill existing employees. There are hundreds of relevant apprenticeships available, so they'll need to find the right apprenticeship to meet their needs.  

That might mean incorporating programmes such as business admin, team leadership, social worker or chartered town planner apprenticeships into their own offices. 

It might also include them working with 'arms-length' organisations. If an authority is technically the employer for services like fire and rescue or a school, then it will need to agree with colleagues in those areas on how best to use the levy funds. That could mean upskilling firefighters using the level 6 fire safety engineer degree apprenticeship or training new teachers with a level 3 teaching assistant apprenticeship.  

The apprenticeship levy is a huge opportunity for local authorities to fill skills gaps, benefit organisations under their control, and support the local community despite stringent budget cuts.  

To find out more about how the apprenticeship levy works for local authorities, download the step-by-step guide. It covers the seven steps local authorities should take to create an apprenticeship strategy and make the most of their levy funds.