Billions of pounds set aside for workforce development have gone unused in recent years, raising concerns that British employers are failing to invest in skills at a time of rapid technological change.
More than £3.3 billion in unspent apprenticeship levy funds was returned to the Treasury between 2019 and 2022, despite growing evidence that businesses face widening skills gaps and increasing demand for digital capability.
The figures come as employer investment in training has fallen sharply over the past decade, with spending down 18.5 percent in real terms since 2011, limiting workforce capability and long term competitiveness.
Employers slow to use available training funds
The research, published by The Coders Guild, a digital skills training provider, points to a lack of understanding among employers about how the levy system works and how it can be used to fund workforce development.
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Crispin Read, founder of The Coders Guild, said many organisations were not taking advantage of funding already available to them. “Too many employers still don’t understand how the skills levy works, or how much support is already available to them.”
He said this was leading to missed opportunities to strengthen workforce capability. “We’re seeing businesses pay into a system designed to fund their own workforce development, and then let that money go to waste.
“That’s a huge missed opportunity. Instead of tapping into fully funded apprenticeships and training, some employers are asking individuals to pay for the very skills their business depends on. It’s not just unfair; it’s inefficient.
“The government is literally offering funding to build skills and close the talent gap, but if organisations don’t take advantage of it, we end up deepening inequality and losing potential from people who can’t afford to self-fund.”
The study suggests that misconceptions about apprenticeships remain a barrier, with some employers continuing to view them as entry-level programmes rather than routes for mid career development and reskilling.
Workers paying for their own development
At the same time, employees are increasingly taking responsibility for their own training. Nearly half of UK workers undertaking online learning are now paying for it themselves, despite being more likely to leave employers who do not support their development.
This trend raises concerns about retention and engagement, particularly as organisations face competition for talent in key areas such as technology and data.
Apprenticeships are also changing in profile. More than half of starts now involve workers aged 25 and over, reflecting a shift towards using the system for career progression and role transitions rather than entry-level recruitment.
AI demand adds urgency to skills investment
The need for better use of training funding is being driven by rapid changes in skill requirements. Demand for artificial intelligence capability has risen sharply, with job postings requiring AI literacy nearly tripling between mid 2023 and late 2024.
At the same time, automation is reshaping how work is carried out, with some estimates suggesting that tools are already generating a significant share of new code. This is increasing demand for higher level skills, including problem solving, oversight and strategic thinking.
Despite this, some employers remain cautious about investing in training, citing concerns that new technologies may render existing skills obsolete. The report argues that failing to invest in development risks leaving organisations unprepared for ongoing change.
The transition from the Apprenticeship Levy to a broader Growth and Skills Levy has expanded the scope for training across different career stages, including digital- and AI-related roles. But uptake remains uneven, with many organisations yet to integrate the funding into workforce planning.
The research also suggests that better use of funded training could deliver measurable returns. It points to evidence that apprentices with digital and AI capability can generate a net benefit for employers, supporting productivity and business performance.
The data was based on analysis of apprenticeship levy usage between 2019 and 2022, alongside wider labour market trends in training investment, skills demand and employee behaviour.
