Northern Coalition on Skills launches to tackle North-South skills gap

26.08.21

The North-South skills gap is holding back productivity and growth. It limits opportunities for young people trying to access better paid jobs and it’s a barrier for businesses looking to invest here in the North of England.

We want to supercharge the skills agenda and create more opportunities for people outside London and the South East through reform to the apprenticeship levy.

According to our research, the number of people starting an apprenticeship over the past two years has fallen by 58,000, a drop of 19%. The impact has been worst in the North of England, where the number dropped by 23,000 – a 22% decrease.

We’re leading a group of large businesses and SMEs from across the North to launch the Northern Coalition on Skills, with the aim of returning apprenticeship numbers to pre-pandemic levels.

Members include Steve Murrells – CEO of the Co-op – who oversaw the launch of the Co-op Levy Share this year; an initiative which shares unspent apprenticeship levy from businesses with other smaller employers, looking to create opportunities for young people from under-represented groups.

Steve Murrells, Co-op CEO and Northern Powerhouse Partnership Board member said: “If we genuinely want to build back Britain different and better, then this must be a decade of collective action when it comes to apprenticeships, that benefits all communities right across the country.

“These apprenticeship figures suggest a staggering North-South divide when it comes to the futures of our young people and, in turn, the skills that will avoid putting our wellbeing and economy at risk in the North. Reform of the apprenticeship levy is a vital building block to ensure this happens.”

Widening North-South Skills Gap

It is vital for businesses based in the North of England to be able to access a highly skilled, highly trained workforce in order to increase productivity and rebalance the UK economy.

According to our research, the North-South skills gap has widened in recent years and businesses say this is holding back the North back from reaching its full potential.

The proportion of people aged 16-64 with post A-Level and equivalent vocational qualifications in the North of England increased from 23 per cent in 2004 to 38 per cent in 2020 – but this is still 7 percentage points less than the rest of the country.

There are, however, signs that better progress is being made in several of the North’s strategically important economic priorities including green energy, digital and health innovation.

Sarah Mulholland, Head of Policy at the Northern Powerhouse Partnership, said: “A skilled, well-paid workforce is the backbone of a productive economy.

“It’s time to begin opening up the industries of the future – electric vehicles, green energy, machine learning – to the next generation of workers through investment in apprenticeships and other training opportunities for our young people.

“The North has the history, the expertise and the tools to lead a fourth industrial revolution. We now need government and businesses to work together to level up opportunity across the country and close the North-South divide in skills for good.”

The Apprenticeship Levy

In 2019/2020, businesses lost out on more than £300million in skills funding from the government, as they failed to spend their full allocation due to rules about how the money can be used.

This figure has risen even higher during the pandemic and the coalition says changes are needed to allow more of the Apprenticeship Levy, introduced by former Chancellor George Osborne in 2015, to be transferred into supply chains.

The Apprenticeship Levy is paid by all companies with an annual salary bill of over £3million, which equates to roughly 2% of businesses in England. Companies pay 0.5% of their monthly payroll, offset by a £15k allowance.

The fund is topped up by a 10% contribution from Government each month. The fund can then be accessed by the employer and must be used to pay for training and development opportunities for their apprentices.

Companies who do not use all their levy fund have the option to transfer 25% of the remaining fund to another business. Any unclaimed levy funds are returned to HMRC after 24 months.

Get involved

Changes are needed to create more opportunities for young people here in the North of England. We’re calling for:

  • An increase in the number of apprenticeships within the Northern Powerhouse to pre-pandemic levels
  • An increase in the maximum amount a company can transfer out of their Apprenticeship Levy to another business, from 25% to 40%
  • The establishment of a Northern Powerhouse-wide network of levy sharing schemes facilitated by the Combined Authorities and Growth Hubs, as has already been established in Greater Manchester.

We’re calling on businesses of all sizes and sectors to do their bit.

For more information, please contact info@northernpowerhousepartnership.co.uk

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