More than £3.3bn has returned to the Treasury in the last three years under the government’s use-it-or-lose-it Apprenticeship Levy rules, according to data collected by the London Progression Collaboration (LPC).
A freedom of information request revealed that since May 2019, employers in England have been returning unspent levy funds earmarked for new apprentices to the Treasury, with businesses losing out on the equivalent of £1.1bn per year or £95m per month.
The LPC, which to date has helped transfer £10m of unspent Apprenticeship Levy from large employers to support small businesses and create over 1,000 apprenticeships, says that it is not clear how the Treasury is making use of the £3.3bn that it has received from businesses.
The LPC argued that if the Apprenticeship Levy is to meet its objective of increasing employer investment in training, the Treasury also needs to give employers greater control over how their funds are directed, including by increasing the 25% Apprenticeship Levy transfer cap. The LPC has seen at first hand the challenges the current system poses to businesses in their work helping firms navigate the complex apprenticeship system and transferring their unspent levy to small businesses.
Research by the LPC, which shows that since 2014-15, ‘entry-level’ apprenticeships have fallen by 72% in England, while apprenticeship starts among under-19s have fallen by 59%, depriving those most at risk of in-work poverty and at the beginning of their careers the best start in life.
In the most recent three years that data is available, apprenticeship starts in the North fell most sharply, with apprenticeships falling by 26% in the North-East, 23% in Yorkshire and the Humber, and 21% in the North-West.
Introduced in 2017, the Apprenticeship Levy requires businesses to set aside 0.5% of their wage bill if they pay over £3m per year. Under Apprenticeship Levy Transfer, levy payers can transfer 25% of their levy pot.
(Information from Recruiter.co.uk)