Pressure mounts on Hinds to explain £500m apprenticeship 'alleged overspend'

The chair of the influential education select committee has urged the government to be “open and transparent” about a projected £500 million overspend on this year’s £2 billion apprenticeships budget, after the education secretary dodged a question about it in parliament yesterday.

Robert Halfon asked Damian Hinds to confirm the figure – first raised by the Institute for Apprenticeships two weeks ago – but his response did not make any response to the overspend.

Robert Halfon

Mr Halfon told FE Week it was “incredibly concerning” if the budget was set to be overspent by the amount highlighted by the IfA and it “could affect the employment of thousands of apprentices”.

“The Department for Education and the Treasury need to be open and transparent about this alleged overspend and what action they are taking to mitigate it,” Mr Halfon said.

He added that he’d tabled a number of Parliamentary Questions in a bid to find out the information.

Mr Halfon asked Mr Hinds to “make sure that the apprentice levy is fit for purpose” and to “confirm that there is a £500m overspend on the apprentice levy budget” during education questions in parliament on Monday.

“I can confirm to my right honourable friend that of course it’s very important that we continue to monitor the way the apprenticeship levy works,” Mr Hinds said in response.

The government has “committed to having a review in which we’ll work with businesses on how that works after 2020” that would “make sure that young people but also older people who are further into their careers can benefit from this programme”, he continued.

The prospect of an apprenticeships budget shortfall was first raised in a presentation by the IfA’s chief operating officer Robert Nitsch, at an employer engagement event at Exeter College on November 30.

That included a slide showing that the apprenticeships budget could be overspent by £500 million in 2018/19, rising to a £1.5 billion overspend in 2021/22.

The figures were exclusively reported by FE Week earlier this month and prompted demands for an open debate on how the levy operates, and for the IfA to share the full presentation.

Shadow skills minister Gordon Marsden has written to Sir Gerry Berragan, boss of the IfA, asking for the presentation to be made public, after the institute refused to share it. 

Gordon Marsden

“With an apprenticeship programme still adapting to the introduction of the apprenticeship levy, and fluctuating starts across levels and standards, I believe maximum transparency as to where the apprenticeship budget is being spent is essential for the health of the sector,” he wrote.

Mr Hinds’ comments yesterday come after he failed to deny the forecast overspend when asked about it by FE Week earlier this month.

“The sorts of things you’re talking about can only be projections,” he said.

“I didn’t write the presentation that you’re referring to so I can’t really comment on it further, but we will obviously be continuing to manage our budget across all areas while continuing to make sure that we are supporting the growth of the apprenticeship scheme.”

However, Keith Smith, the Education and Skills Funding Agency’s director of apprenticeships, told FE Week last week that he was “not expecting any pressures” on the budget this year.

“I think what they were trying to set out was one scenario or a potential, particular illustration of what the budget might do and might happen, depending on some assumptions about demand, take up and those sorts of things,” Mr Smith said.

However, he added that from the agency’s “current point of view we’re working within the context that the apprenticeship levy does and can continue to cover the costs of the programme”.