Large employers lose access to £96 million of apprenticeship funding in just two months

Employers lost access to £44 million of their apprenticeship levy funds in July, and £52 million in August, the government has revealed.

It means that a total of £133 million has expired from employers’ levy accounts to date.

However, it is important to remember that the levy policy was designed so that large employers wouldn’t use all of their funds. The unspent money is recycled and made available to small businesses who do not pay the levy to use to train their apprentices. Unspent funds are also used to top-up levy funds by 10 per cent as well as pay for English and maths teaching for relevant apprentices, amongst other things.

As per levy rules, businesses with a payroll of £3 million or more pay each month into the pot and have a rolling 24-month deadline to spend the funds.

The first month that funds could have expired was May 2019, as the levy policy kicked in at the start of April 2017.

Expired funds for July and August are much larger amounts than what big businesses lost access to in May (£11 million) and June (£26 million).

FE Week analysis suggests a significant reason for the increase relates to 1,430 employers waiting until July and August to register to the government’s apprenticeship system.

Kemi Badenoch, the Department for Education minister who has now gone on maternity leave and had her FE duties temporarily replaced by Michelle Donelan, revealed the latest levy expired amounts yesterday in answer to a parliamentary question tabled by Catherine McKinnell MP.

“The amount of funds expiring in employers’ digital apprenticeship service accounts in July 2019 was £44 million, and in August 2019 it was £52 million,” Badenoch said.

“As well as funding apprenticeships in levy-paying employers, levy contributions are also used to fund training for existing apprenticeship learners and new apprenticeships in employers that do not pay the levy.

“We do not anticipate that all employers who pay the levy will need or want to use all the funds in their accounts, though they are able to do this if they wish.”