Unlocking Potential: How Local Government Can Maximise the Apprenticeship Levy

Apprenticeships have long been heralded as a powerful tool for workforce development, offering a structured pathway into skilled employment while addressing critical skills shortages across sectors. In the context of local government which collectively employs over 1.18 million people across a vast array of services, from adult social care and environmental health to planning, housing, and regulatory services apprenticeships represent a unique opportunity to “grow your own” talent.

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This is particularly pertinent at a time when councils face acute recruitment and retention challenges. According to the Local Government Association (LGA), 94% of councils report difficulties in recruiting to at least one occupation, with social workers, planners, and environmental health officers among the hardest to fill. Apprenticeships offer a sustainable solution, enabling councils to build a pipeline of skilled professionals tailored to local needs.

However, despite the clear benefits, many councils are struggling to fully utilise the apprenticeship levy a government initiative introduced in 2017 to fund apprenticeship training.

Under the scheme, public sector employers with a pay bill over £3 million must contribute 0.5% of their payroll into a digital account, which can then be used to fund apprenticeship training. Yet, if these funds are not used within 24 months, they expire and are returned to the Treasury.

The National Audit Office (NAO) has reported that public sector bodies, including councils, have collectively returned hundreds of millions of pounds in unspent levy funds. This represents a significant missed opportunity not only in terms of financial efficiency but also in the potential to address workforce gaps, support local economic development, and improve social mobility.

The reasons for underutilisation are complex and multifaceted, ranging from a lack of awareness among hiring managers to challenges in aligning apprenticeship standards with existing roles. But with the right strategic approach, these barriers can be overcome.

This blog explores how the apprenticeship levy works in practice, the specific challenges local authorities face in deploying it effectively, the tangible benefits of investing in apprenticeships, and the practical steps councils can take to overcome obstacles and maximise the impact of their levy spend. In doing so, it aims to support local government leaders, HR professionals, and workforce planners in unlocking the full potential of apprenticeships not just as a compliance exercise, but as a cornerstone of workforce transformation.

How the Apprenticeship Levy Works

Introduced by the UK Government in April 2017, the apprenticeship levy was designed to transform the way apprenticeships are funded and delivered. It applies to all employers with an annual pay bill exceeding £3 million, requiring them to contribute 0.5% of their total payroll into a ringfenced digital account. This account is managed through the Apprenticeship Service and can only be used to fund apprenticeship training and assessment with registered training providers.

For every £1 paid into the levy, the government adds a 10% top-up, meaning employers effectively have £1.10 to spend for every £1 they contribute. However, there’s a catch: these funds must be used within 24 months, or they expire and are returned to HM Treasury. This time-limited nature of the funding creates pressure on employers to plan and implement apprenticeship programmes swiftly and strategically.

Local authorities, as large public sector employers, are subject to the levy and collectively contribute tens of millions of pounds each year. Yet, despite this significant investment, many councils are not spending their full allocation. According to the Local Government Association (LGA), “councils are sitting on millions of pounds in unused funding,” with some authorities losing up to 40% of their levy contributions due to expiry. The reasons for this underutilisation are complex. Systemic barriers such as the limited availability of suitable apprenticeship standards, the challenge of aligning training with workforce planning cycles, and the administrative burden of managing the levy all contribute to the issue. Additionally, the rigid rules around eligible training and the requirement to use only approved providers can limit flexibility, particularly in specialist service areas like planning, environmental health, or adult social care.

Moreover, the public sector is subject to a separate target: 2.3% of the workforce should be apprentices. While this target is well-intentioned, it can be difficult to achieve in practice, especially in services where roles require specific qualifications or where workforce turnover is low.

Despite these challenges, the apprenticeship levy remains a powerful tool for workforce development if used effectively. For local government, it offers a rare opportunity to invest in future talent, upskill existing staff, and build a more resilient, diverse, and capable workforce. The key lies in understanding the mechanics of the levy, identifying where apprenticeships can add the most value, and embedding them into long-term workforce strategies.

The Benefits of Apprenticeships in Local Government

Apprenticeships are more than just a route into employment they are a strategic tool for workforce development, succession planning, and community investment. For local authorities, which face increasing pressure to do more with less, apprenticeships offer a cost-effective and socially responsible way to build capacity, address skills shortages, and support inclusive growth.

Here are some of the key benefits:

1. Addressing Skills Gaps

Local government is grappling with acute skills shortages in critical service areas. According to the Local Government Association (LGA), 94% of English councils report difficulties in recruiting and retaining staff in at least one key profession. Roles in adult social care, children’s services, planning, environmental health, and early years education are particularly hard to fill.

Apprenticeships provide a sustainable solution by creating a pipeline of homegrown talent. Councils can recruit apprentices into entry-level roles and support them to develop the skills and qualifications needed to progress into more senior positions. This “grow your own” approach is especially valuable in rural or economically disadvantaged areas where attracting experienced professionals can be challenging.

Source: Sixth Report of Session 2024 - 2026.

2. Improved Retention and Morale

Investing in staff development through apprenticeships has a positive impact on morale and retention. National data shows that 73% of employers report improved staff morale, and 69% say apprenticeships help them retain talent. For councils, this is particularly important given the high cost of turnover and the disruption it causes to service delivery. Apprenticeships also demonstrate a tangible commitment to staff development, which can boost engagement and loyalty. Many councils have successfully used apprenticeships to support career progression for existing employees, helping them move into more senior or specialist roles.

3. Cost-Effective Upskilling

The apprenticeship levy provides a dedicated funding stream for training, allowing councils to invest in workforce development without drawing on overstretched budgets. This is especially valuable in the current financial climate, where local authorities face ongoing funding pressures and rising demand for services. By using levy funds to upskill existing staff, councils can reduce their reliance on expensive agency workers or external recruitment. For example, a council might use the levy to train a housing officer in project management or support a business support officer to become a qualified data analyst roles that are increasingly vital in a digital-first public sector.

4. Promoting Diversity and Inclusion

Apprenticeships can play a key role in widening access to employment and supporting underrepresented groups. They offer an alternative to traditional academic routes, making them particularly attractive to young people, career changers, and those from disadvantaged backgrounds. Many councils are using apprenticeships to support their equality, diversity, and inclusion (EDI) objectives. For example, some have developed targeted pre-apprenticeship programmes for care leavers, people with disabilities, or residents from ethnic minority communities. By removing barriers to entry and providing structured support, apprenticeships can help build a more representative and inclusive workforce that reflects the communities councils serve.

Challenges in Utilising the Levy

While the apprenticeship levy presents a significant opportunity for local authorities to invest in workforce development, many councils continue to face persistent barriers that limit their ability to fully capitalise on the funding available. These challenges are often systemic, operational, and cultural in nature, and they require coordinated action across HR, finance, and service departments to overcome.

1. Complexity and Bureaucracy

The apprenticeship system is often described as overly complex, particularly for organisations without dedicated apprenticeship leads or workforce development teams. Navigating the digital apprenticeship service, understanding funding rules, and managing relationships with training providers can be time-consuming and administratively burdensome. Smaller councils, in particular, may lack the internal capacity to manage these processes effectively, leading to delays or missed opportunities.

2. Limited Flexibility

One of the most frequently cited frustrations is the inflexibility of the levy system. The 24-month expiry period for levy funds creates a “use it or lose it” pressure that can be difficult to reconcile with the longer-term nature of workforce planning in local government. Additionally, the levy can only be used for training and assessment not for associated costs such as salaries, mentoring, or backfilling roles which can make it financially unviable for some services to release staff for training.

3. Lack of Awareness and Engagement

In many councils, there remains a gap in understanding among service managers about how apprenticeships can be used strategically. Without clear communication and leadership from HR and organisational development teams, apprenticeships can be seen as a “nice to have” rather than a core workforce tool. This lack of engagement can result in missed opportunities to embed apprenticeships into service planning, particularly in areas facing acute recruitment challenges.

4. Mismatch of Standards

Although the number of approved apprenticeship standards has grown significantly in recent years, some councils still report difficulties in finding standards that align with their specific workforce needs. For example, niche roles in environmental health, regulatory services, or planning may not have suitable apprenticeship pathways, or the available standards may not be flexible enough to meet local requirements. This misalignment can delay implementation or lead to a lack of confidence in the value of apprenticeships.

Image credit: iStock

Overcoming the Barriers

While the challenges of utilising the apprenticeship levy are real, they are not insurmountable. Many councils across the UK are already demonstrating how a strategic, collaborative approach can unlock the full potential of apprenticeships. Here are five key strategies that can help local authorities overcome common barriers and make the most of their levy investment:

1. Leadership Buy-In

Securing visible and sustained commitment from senior leaders is essential. When Chief Executives, Directors, and Cabinet Members champion apprenticeships as a strategic workforce priority rather than a compliance exercise it sends a powerful message across the organisation. Embedding apprenticeships into corporate workforce strategies, transformation plans, and service redesign initiatives ensures they are not side lined but seen as a core part of how councils build future capability.

2. Apprenticeship MOTs

The Local Government Association (LGA) offers “Apprenticeship MOTs” short, focused reviews that help councils assess how effectively they are using the levy. These reviews benchmark current performance, identify gaps in provision, and provide tailored recommendations for improvement. Councils that have undertaken an MOT often report increased confidence, clearer governance structures, and a stronger pipeline of apprenticeship starts.

3. Strategic Partnerships

Working closely with high-quality training providers is critical. Councils benefit most when they partner with providers who understand the unique context of local government including its regulatory environment, service pressures, and diverse workforce. Some authorities have gone further by forming consortia with neighbouring councils or NHS trusts to commission shared apprenticeship provision, achieving economies of scale and greater influence over curriculum design.

4. Levy Transfers

Councils can transfer up to 50% of their unused levy funds to other employers such as local SMEs, charities, or voluntary sector organisations to support wider skills development in their communities. This not only prevents funds from expiring but also strengthens local partnerships and supports inclusive economic growth. For example, some councils have prioritised levy transfers to care providers, helping to address workforce shortages in the adult social care sector.

5. Use of the Apprenticeship Maturity Model

Developed by the LGA, the Apprenticeship Maturity Model is a self-assessment tool that helps councils evaluate the maturity of their apprenticeship approach across key domains such as leadership, planning, delivery, and impact. By identifying where they are on the maturity curve from “emerging” to “leading” councils can develop targeted action plans to strengthen their apprenticeship offer and embed it more deeply into organisational culture.

Making the Most of the 24-Month Window

One of the most pressing challenges with the apprenticeship levy is the strict 24-month deadline for spending funds. After this period, any unspent money is automatically reclaimed by the Treasury a frustrating outcome for councils already grappling with budget constraints. To avoid this, local authorities must adopt a proactive and strategic approach to planning and delivery. Here are three key actions councils can take to ensure they make the most of their levy allocation:

1. Map Apprenticeship Standards to Job Roles

A foundational step is to conduct a comprehensive mapping exercise to identify where apprenticeship standards align with existing or emerging job roles. This helps embed apprenticeships into workforce planning rather than treating them as standalone initiatives. For example, a Level 3 Business Administrator apprenticeship might be suitable for entry-level roles in customer services or democratic services, while a Level 6 Environmental Health Practitioner standard could support succession planning in regulatory services. By identifying these opportunities early, councils can build apprenticeships into recruitment and development pathways, ensuring a steady flow of starts and a clear return on investment.

2. Plan Ahead with a Rolling Programme

Rather than relying on ad hoc recruitment or reacting to funding deadlines, councils should develop a rolling programme of apprenticeship starts throughout the year. This approach smooths demand, avoids bottlenecks, and ensures a continuous pipeline of talent. It also allows for better coordination with training providers and internal teams, reducing the risk of delays or missed opportunities. Some councils have created internal apprenticeship “academies” or frameworks that set out clear timelines, roles, and responsibilities for managers, HR, and finance teams helping to embed apprenticeships into the organisational rhythm.

Source: DFE.

3. Engage Schools, Colleges, and the Community

To build a sustainable pipeline of future apprentices, councils must engage with local schools, colleges, and community organisations. Promoting apprenticeships as a viable and attractive career path particularly for young people, care leavers, and those not in education, employment or training (NEET) helps to raise awareness and diversify the talent pool. Many councils now attend careers fairs, run pre-apprenticeship programmes, or offer work experience placements linked to apprenticeship pathways. These initiatives not only support local economic development but also reinforce the council’s role as a civic leader and inclusive employer.

Conclusion: A Call to Action

As the Local Government Association rightly observes,

“The apprenticeship levy is a huge opportunity for local authorities to fill skills gaps, benefit organisations under their control, and support the local community despite stringent budget cuts.” 

But to realise this potential, councils must shift their mindset from viewing the levy as a bureaucratic obligation to embracing it as a strategic enabler of workforce transformation.

The challenges are real: complex systems, tight timelines, and limited flexibility can make the levy feel more like a burden than a benefit. Yet, across the country, forward-thinking councils are proving that with the right leadership, planning, and partnerships, apprenticeships can be a cornerstone of modern public service delivery.

This is a call to action for local government leaders, HR professionals, and service managers: take stock of your current approach, engage with the tools and support available, and embed apprenticeships into the heart of your workforce strategy. Whether it’s developing the next generation of social workers, upskilling existing staff in digital and data roles, or supporting local SMEs through levy transfers, the opportunities are vast but time-limited. The levy clock is ticking. Let’s ensure every pound invested in it delivers value not just for councils, but for communities, economies, and the future of public service.