Fixing the Levy

As construction faces its biggest skills shortage in decades, Nicola Hodkinson, Owner and Director of Seddon explains why reforming the Apprenticeship Levy is essential to securing the industry’s future workforce

The UK construction industry continues to face a workforce crisis, with 251,500 extra workers needed by 2028 just to keep up with demand – but the current apprenticeship system is failing to deliver the skilled workforce the industry desperately needs.

With a 47 per cent apprenticeship dropout rate and a heavily self-employed workforce, urgent action is needed to reform the Apprenticeship Levy, making it more flexible and tailored to the construction industry’s unique requirements. This includes modularising apprenticeship standards to support the specialisms offered by contractors and allow apprentices to gain experience across multiple employers.

Only by creating a system that recognises construction’s specific workforce patterns and skill needs can we build a workforce fit for the future.

THE CURRENT STATE OF THE APPRENTICESHIP LEVY

The Apprenticeship Levy, introduced in 2017 by the Conservative Government, was designed to provide long-term funding for apprenticeships and give employers more control over training opportunities. But when it comes to addressing skills development, the current Levy is falling short.

Construction employers are subject to both the Apprenticeship Levy and CITB funding, yet these levies lack the flexibility and support the industry needs. Most contractors specialise in specific areas of construction, making it difficult for them to provide apprentices with the full range of work experience required by the current apprenticeship standards. This, along with limited funding and a lack of incentives, makes it harder for employers to hire and retain apprentices, exacerbating the skills gap.

We cannot allow the current system to shut out eager candidates. Last year, Seddon received over 1,100 applications for just 16 apprenticeship vacancies, including a significant number of women looking to enter the industry. The demand is there, but a lack of funding, apprenticeship opportunities, and employment incentives is preventing many aspiring apprentices from accessing careers in construction.

If the government reformed the Levy to better align with the needs of the construction industry – offering greater flexibility, targeted funding, modularised standards to support contractor specialisms, and procurement policies that require apprenticeship opportunities – the sector could finally begin building the skilled workforce it urgently needs.

COLLABORATING WITH SUPPLY CHAINS

Despite the high demand we are seeing for apprenticeship places, the system remains flawed in its ability to allow employers to effectively access and utilise funding for apprentices. That said, a key solution lies in strengthening supply chain collaboration. By working closely with subcontractors, suppliers, and organisations like CITB, main contractors can develop alternative pathways, such as traineeships for experienced candidates.

Modularising apprenticeship standards is also crucial, allowing apprentices to move between employers to gain experience without risking their apprenticeship. Meaningful incentives for employers in underserved areas will ensure that location doesn’t hinder someone’s construction career.

Last year, by collaborating with our supply chain partners, Seddon placed an extra 20 apprentices across the supply chain that we simply could not take on ourselves. I would like to see more main contractors adopting this approach in 2025 – it is a surefire way to create a more sustainable pipeline of skilled workers.

PROCUREMENT POLICIES TO LEVEL THE PLAYING FIELD

We need to see a shift in procurement policies. If public sector procurement practices moved towards one which supported and protected workforce employment, this would create a level playing field when it came to win work strategies and would directly and positively impact the sector’s productivity levels whilst reducing the flexible labour model.

Making employment and apprenticeship opportunities a requirement in contracts would ensure that all firms contribute to workforce development rather than just a select few. This approach would not only support apprentices but also help secure the skilled labour force needed to meet the UK government’s ambitious building targets. Without a long-term commitment to training the next generation, the industry will continue to face labour shortages, rising costs, and project delays.

The over-reliance on the Flexible Labour Model (FLM) in construction is another factor contributing to the skills crisis. The widespread use of self-employed tradespeople and agency workers has led to a focus on short-term cost-cutting rather than long-term workforce development.

If we address the needs of those already in the industry – upskill and reskill – there will be a natural flow within the industry which will directly support new entry, but the key must be employment. We must move to an employed model to solve our workforce issues.

THE STEPS TO REFORM

The current Levy structure fails to account for the construction sector’s unique needs, placing a financial burden on companies while offering little flexibility in how funds can be used. A restructured system – one that allows Levy funds to be reinvested into more tailored training programmes, specialist apprenticeships, and collaborative supply chain initiatives – would provide the industry with the tools it needs to bridge the skills gap.