Education | Employers still failing to take advantage of Apprenticeship Levy

Employers still failing to take advantage of Apprenticeship Levy

Almost two years after the implementation of the Apprenticeship Levy, apprenticeship start figures have continued to fall – research from City & Guilds has found.

The levy was designed to increase investment in apprenticeship training and assessment. According to guidelines from the Department for Education (DfE), an employer paying £10,000 a month into their levy account would receive that £10,000 back to spend on apprenticeships, plus a ten per cent contribution from the Government.

However, responding to a Freedom of Information request from the City & Guilds Group, the DfE confirmed that in 2017/18, it received an annual apprenticeships budget of £2.01billion from the Treasury. Of this, it appears that only £268million was spent by levy-paying employers on apprentices.

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Of the remainder, some £1.065billion was spent on pre-levy training; £189million on apprentices for non-levy paying employers; and £58million on maintaining the apprenticeship programme and service, and on learners still funded under legacy areas of policy such as the Apprenticeship Grant for Employers and the Employer Ownership programme. 

This leaves a £400million underspend in the first year of the system alone. Kirstie Donnelly MBE, Managing Director at City & Guilds Group said:

“It’s concerning to see in its first year the apprenticeship levy had such a significant underspend and brings to light two major concerns.” 

“Firstly, it appears that the apprenticeship budget set by the Treasury fell well below the amount of levy money collected by HMRC, meaning the Government would never have been able to fulfil its promised apprenticeship funding for employers. 

“Secondly, we can see that around 90% of the, already less-than-adequate, apprenticeship budget has not been available for employers to spend as they choose, despite that being the key reason behind the levy.”

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In light of these findings and the fact that our own research shows 95% of levy-paying employers were not able to spend their full allowance in the first year, City & Guilds are calling on the Government to increase flexibility and provide clarity around the apprenticeship system.

“Apprenticeships are key to unlocking the economic and social prosperity of our country and without the full trust and support of Government, we will find it difficult to be able to reap the benefits they offer,” added Donnelly.

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