Apprenticeship Levy reforms proposed by the chancellor of the exchequer at this week’s Conservative Party conference have been hailed as “excellent news” by the Institute of the Motor Industry.

Under plans proposed by the chancellor, Philip Hammond, employers will be able to transfer a quarter of their apprenticeship levy-subsidised training fund to another organisation, a measure which the IMI claims automotive sector businesses have been appealing for.

The Government intends to allocate an additional £90 million in Apprenticeship Levy funding, allowing employers to transfer a larger chunk – currently just 10% of their training fund – of their annual training fund to another business from April next year.

Steve Nash, chief executive at the IMI, said: “Philip Hammond has set out the Conservative party’s wish to be considered the ‘party for business’. And the widening of access to the Apprenticeship Levy, to those businesses in the corporate supply chain, is excellent news. 

“For some time, at the IMI, we have been hearing from businesses that they believed the scope of the Levy was too limited.”

The Government also plans to consider how the levy will operate after 2020.

The number of apprenticeship new starters has declined significantly since the Levy was introduced, and the Government.

The most recent figures (up to July) show there were 290,500 apprenticeship starts in the first three quarters of the 2017/18 academic year, compared with 440,300 in 2016/17.

But Nash said that the IMI would urge caution when it comes to reviewing the apprenticeship model in 2020, which was also proposed by Philip Hammond.

He said: “Of course, it’s important to listen to business and address any barriers to apprenticeship take-up, but by 2020 the new reforms will be fully bedded in – wholesale change would therefore be a disaster. The last thing businesses need is to have to start all over again.”

The apprenticeship levy reforms announced by Philip Hammond in Birmingham yesterday (October 1) include an extra £5 million to help the Institute of Apprenticeships offer more training options.

It is hoped this will be achieved through the introduction of new apprenticeship standards or updating existing ones.

The chancellor said: “We have heard the concerns about how the apprenticeship levy is working… so today we’ve set out a series of measures to allow firms more flexibility in how the levy is spent.

“But we know that we may need to do more to ensure that the levy supports the development of the skilled workforce our economy needs. So in addition to these new flexibilities, we will engage with business on our plans for the long-term operation of the levy.”

Nash said that changes should stay to a minimum to allow car retailers to maximise their understanding and use of the Levy system. He said: “The IMI therefore urges government to stick with the new model already introduced and to focus its efforts on ensuring businesses fully understand how they can maximise the levy for the benefit of their organisation.

“The skills gap in the motor retail sector is already critical. Young blood is, therefore, vital as the rapid development of new technology around electric, autonomous and connected vehicles changes the face of motoring, opening up a world of exciting new career opportunities.”

• IMI chief executive Steve Nash will be discussing apprenticeships and the Apprenticeship Levy in the IMI People Theatre at Automotive Management Live on November 8. Click here to register for the event.