Businesses should be free to spend their apprenticeship levy funds across the UK’s four nations and on capital investments, MPs have argued.
Parliament’s transport committee has also called for the government to address low diversity levels in transport manufacturing by restricting businesses’ ability to spend levy funding if they fail to meet their own recruitment targets.
The recommendations were laid out in the committee’s report, ‘engine for growth: securing skills for transport manufacturing’, which examined what the government could do to support the £156 billion pound output-per-year sector with a pipeline of skilled workers.
Restrictions on levy funding such as only allowing it to be spent in England are “throttling opportunities” for manufacturers who operate across the UK, the committee concluded.
MPs also echoed concerns from industry bodies such as ADS Group and Make UK, who criticised “inflexible” rules that block spending on capital investments such as industry-standard equipment and machinery.
On the advice of campaign group Women in Transport, the committee also said the government must address the 70 per cent male employee average in the sector and embed gender equality in the system by making employers’ access to levy funding “contingent” on whether they hit their own diversity targets.
Chair Ruth Cadbury said her committee’s recommendations would ensure the UK can “seize the new opportunities out there”, including in new growth areas such as electric vehicles.
Other recommendations, which focus on government policy, include a Department for Transport “deep dive” into whether the UK’s vocational training system is “cutting the mustard”, introducing a skills “competency passport”, and reversing the restriction of level 7 apprenticeships to people under 22 years old.
Good work, but high vacancies
The government’s employer skills survey suggests that transport manufacturing had the third highest vacancy level for the last three years, with an estimated 50,000 vacancies across the sector that currently employs about 350,000 people.
This is despite manufacturers of motor vehicles, buses, aeroplanes, trains and ships providing “high quality, well paid” work.
The shortages are for a combination of reasons, including “poor perceptions” of manufacturing as a career option, difficulty moving between roles.
In addition, manufacturing is seeing “rising demand” for advanced knowledge and facing a looming “retirement cliff-edge” of older workers over the next decade.
‘Costly and overcomplicated’
Trade association ADS Group showed the committee research suggesting companies have spent an average of 55 per cent of their levy funds over the last five years.
Senior vice president at Airbus UK, Oriel Petry, slammed the levy system as “bureaucratic, costly and complicated” for large manufacturers.
Petry said the aerospace giant has a “hugely frustrating” situation it is paying for 12,500 people but that levy funds can only be spent in England, despite employing many at its main wing factory in Wales.
Industry body Make UK also criticised difficulties in sustaining engineering and manufacturing training due to “inflexible rules” on capital expenditure for training equipment.
As a result, the committee said the government said “more should be done” including consulting on permitting levy funding spending across the UK for manufacturers with operations across the country.
It also recommended allowing capital expenditure for training equipment if it is not to the detriment of small and medium sized businesses in the levy supply chain.
The Department for Work and Pensions, which is now responsible for apprenticeship levy policy, said: “We are investing £725 million to reform the apprenticeship system, helping 50,000 more young people into work and driving economic growth.
“From April 2026, the new Growth and Skills Levy will give employers greater flexibility, including access to short courses ensuring the programme remains sustainable and delivers for young people.”
They added that the apprenticeship budget has spent by an average of 98 per cent over the last three financial years.
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