Employers use just 10% of their apprenticeship levy funds in first year

Employers have used just 10 per cent of their apprenticeship levy funds in first 12 months since it was introduced.

The education minister Lord Agnew admitted to parliament that between May last year and the end of this April, levy-paying employers “drew down £207 million from their apprenticeship service accounts for new starts”.

This amounts to just 10 per cent of the ring-fenced apprenticeship budget which has been set by the government “regardless of how much levy receipts are each year”.

The parliamentary under-secretary at the Department for Education explained this budget was set at £2.01 billion for the 2017-18 financial year, to “fund new apprenticeship starts in levy and non levy-paying employers and to cover the ongoing training costs of apprentices that are already in training”.

He added that as the apprenticeship programme is demand-led, and employers “can choose which apprenticeships they offer, at what level and when”, actual spend to April 2019 “is still unknown”.

“We will publish details on aggregate apprenticeship spending in our departmental end-of-year accounts as part of our normal financial reporting cycle,” he continued.

Large employers have been forced to pay the apprenticeship levy since it was launched last year.

The money goes into a pot which they have two years to claim back to spend on apprenticeship training.

The government had hoped that the levy would force more employers to invest in training, and help it hit its manifesto target of three million apprenticeship starts by 2020.

But starts have actually fallen since its launch. They were down a massive 40 per cent in February on the same period in 2017, as revealed by latest provisional government statistics.

There were 21,800 starts reported for the month, compared with February 2017’s provisional total of 36,400, according to the Education and Skills Funding Agency’s monthly apprenticeship statistics update, published this morning.

This represents this biggest year-on-year percentage drop since last August.