Underutilisation of the Apprenticeship Levy saw over £3.3 billion in unused funds returned to the Treasury between 2019 and 2022 – with an estimated £330 million linked to North West employers.
Employer investment in training has declined 18.5% in real terms since 2011, reducing workforce capability and competitiveness.
Nearly half of UK workers undertaking online training now pay for it themselves, despite being significantly more likely to leave employers who do not support their development.
AI demand has surged, with UK job postings requiring AI literacy nearly tripling between mid-2023 and late 2024, yet many employers fear technological change may render current skills obsolete.
Meanwhile, 51% of apprenticeship starts are now for professionals aged 25 and over, signalling a major shift toward mid-career development.
A new study launched by The Coders Guild, experts in digital skills training, reveals a critical ‘perception gap’ that is causing North West businesses to miss out on millions in workforce development funding, even as AI and automation rapidly reshape the regional labour market.
The report, The Missed Opportunities of The UK Skills Levy Whitepaper (2026), highlights that while skill requirements are accelerating across the UK, employer-supported development has not kept pace. This misalignment is creating unnecessary costs for businesses, weakening workforce capability, and undermining long-term competitiveness – with significant implications for the North West.
Nationally, more than £3.3 billion in unused Apprenticeship Levy funds was returned to the Treasury between 2019 and 2022. Based on the North West’s share of UK economic output (approximately 10–11%), this suggests that an estimated £330 million of levy funding linked to North West employers may have expired unused during that period.
Those with payrolls above £3 million contribute 0.5% of annual wage bills and have just 24 months to deploy funds before they expire. Many are paying into a system designed to fund their own workforce development, only to see that investment lapse.
The North West economy – spanning advanced manufacturing and materials in Lancashire, life sciences and media in Greater Manchester, logistics and port operations around the Liverpool City Region, and a fast-growing digital sector across Manchester and Cheshire – faces persistent skills shortages, particularly in digital, engineering, advanced manufacturing, and data-driven roles.
According to the Department for Education, apprenticeship participation in the North West consistently accounts for around one in eight of all starts nationally, reflecting the scale of employer engagement in the region. However, levy-paying employers are still leaving significant funds unspent.
At the same time, the region continues to experience productivity challenges. Data from the Office for National Statistics shows that output per hour in parts of the North West remains below the UK average, reinforcing the importance of higher-level technical and digital skills in closing the gap.
Yet apprenticeships are still too often viewed by employers as entry-level recruitment tools or CSR initiatives rather than strategic assets for upskilling existing staff. With 51% of apprenticeship starts now undertaken by those aged 25 and over, the levy increasingly supports mid-career transitions and higher-level digital capability – including Level 4–6 programmes in software development, data, and cyber security.
Employer-funded training has fallen sharply. Investment in workforce development has declined by 18.5% in real terms since 2011, while nearly half of UK workers undertaking online training now pay for it themselves.
Research consistently shows that employees who must self-fund essential development are significantly more likely to leave. For North West employers already competing for talent – particularly in hubs such as Manchester’s digital cluster and the Liverpool City Region’s life sciences corridor – this creates avoidable retention risks and increased recruitment costs.
The urgency is compounded by rapid AI adoption. UK job postings requiring AI literacy nearly tripled between mid-2023 and late 2024, and in some contexts AI tools are now generating over 40% of new code. Organisations that fail to use funded programmes to train staff in higher-order digital and AI skills risk falling behind.
In a region with over 7 million residents and more than 300,000 businesses, under-utilised levy funding represents a major missed opportunity to future-proof the North West workforce and support inclusive economic growth.