- Thatcham Research calls on Skills England and IfATE to raise the Apprenticeship Levy cap and invites members of the UK automotive repair chain and training providers to sign petition
- Levy cap for vehicle damage standards has not kept pace with inflation and no longer meets modern training standards
- Action needed today to meet Net Zero targets and successful adoption of automated and electric vehicles on UK roads
Thatcham Research, the UK’s only not-for-profit automotive risk intelligence company, is today calling on Skills England and the Institute for Apprenticeships and Technical Education (IfATE) to increase the Apprenticeship Levy funding cap which has remained unchanged since 2019.
The levy, capped at £15,000 per apprentice, has not kept pace with inflation and no longer meets modern training standards, resulting in a real-term reduction in training capacity.
All businesses with a wage bill of £3m+ per year must pay 0.5% of their monthly payroll as levy tax. These contributions are then used to pay for their apprenticeship training. However, if funds are not used within 24 months, they are returned to the Treasury.
Reliable and flexible access to apprenticeship funding is crucial in supporting businesses to address the skills crisis, enabling adequate provision of training opportunities for new starters.
Jonathan Hewett, Chief Executive at Thatcham Research, said: “The automotive sector is facing a perfect storm of rapid technological change, a reduction in upskilling and recruitment, and an ageing workforce.
“Revisions to apprenticeship levy funding must be addressed as a priority by Skills England and IfATE, unlocking funding to deliver much-needed technical training to the repair sector.”
Skills crisis to impact sustainable adoption of new vehicle technologies
As highlighted in Thatcham Research’s Impact of BEV Adoption on the Repair and Insurance Sectors report last June, approximately 16% of UK technicians have the relevant qualifications to work on electric vehicles (EVs). The Institute of the Motor Industry also predicted that by 2030 there will be a shortfall of 35,700 qualified technicians.
While Thatcham Research has sought to address this shortage through the provision of training programmes such as EV Ready, the UK remains at risk of missing Net Zero targets which rely on new repair skills to ensure the sustainable adoption of EVs.
There are also concerns about rising insurance costs and the emergence of unrepairable vehicles, should the skills crisis continue. A backdrop of increasing vehicle complexity driven by the Automated, Connected and Electric (ACE) agenda is exacerbating the skills crisis, in addition to the widespread fitment of recently mandated Advanced Driver Assistance Systems (ADAS) to new vehicles. Earlier this year, the ABI highlighted the average price paid for motor insurance rose by 25%[1] over 2023.
To support urgent changes to the levy cap, Thatcham Research invites trainers, garages, bodyshops and others within the repair chain to sign a petition calling for Skills England and IfATE to review the 2019 cap.
Thatcham Research is calling for:
- An immediate 20% increase to the 2019 Apprenticeship Levy cap. For vehicle damage apprenticeships (including paint and panel technicians, and mechanical, electrical and trim (MET) technician) it would increase from £15,000 to a minimum of £18,000 per apprentice
- Future apprenticeship funding to remain in-line with inflation via periodic levy review
Businesses and individuals can sign the petition here: https://www.change.org/thatcham-research-skills-england-apprenticeship-levy-petition
Hewett continues: “The new Labour Government must ensure that upskilling within the automotive sector is a priority, if the UK is to realise the benefits of assisted and automated driving and achieve crucial Net Zero targets.
“Without a robust and qualified technical workforce in our repair sector, the UK will also be at risk of increased insurance premiums and the emergence of the ‘throwaway vehicle’.
“I encourage everyone throughout the UK auto repair supply chain to sign our petition and show their support for change to the apprenticeship levy.
“While increased funding for the next generation of skilled technicians remains vital, it must come as part of a holistic approach to addressing the skills crisis.
“This includes the sector coming together to change perceptions around working in repair and position a career in the industry as a rewarding, progressive and dynamic opportunity.
“With fairer funding we would expect to see a recovery in training capacity and a reversal of colleges closing their automotive divisions, providing the industry with much needed support to attract new talent.
“This is more crucial than ever as recent reporting from the Institute of the Motor Industry found that the automotive sector has the highest ratio of vacancies in the UK, with 21,000 jobs left vacant.
“Together we can ensure we have access to the funding required to fix this situation before it worsens.”
