The Department for Education is set to hand back £60 million of apprenticeship funding to the Treasury in 2023-24, new figures show.
Of the department’s £2.585 billion ring-fenced apprenticeship budget this financial year, £2.525 billion, or 98 per cent, is expected to be spent.
The figures, released this week in the Treasury’s supplementary estimates, would mark a slight drop in the underspend recorded in 2022-23, when £96 million, or four per cent, of England’s ring-fenced apprenticeships budget went unused.
The budget is set to rise to £2.7 billion from 2024-25. However, the disparity in what is distributed by the Treasury for public spending on apprenticeships compared to how much the levy is generating continues to grow.
Latest Treasury figures show £3.170 billion was received from employers who pay the apprenticeship levy between April 2023 and January 2024, with two months’ worth of receipts to come before the end of the financial year.
A recent Office for Budget Responsibility (OBR) forecast predicted that total apprenticeship levy intake to HMRC will reach £3.9 billion in 2023-24.
When DfE’s ring-fenced budget spend on apprenticeships in England is combined with the £500 million-odd that is handed to the devolved nations from the levy, it leaves around £875 million that was generated by the levy, but held onto by the Treasury in 2023-24.
The DfE said final underspend figures for 2023-24 will be released later this year.
A DfE spokesperson added: “The apprenticeship levy has enabled us to increase investment in apprenticeships to £2.7 billion a year by 2024-25 – supporting employers of all sizes and in all sectors offer more apprenticeships. Over the last two years, 98 per cent of the budget was spent helping thousands of businesses take on apprentices.
“Spending on the apprenticeship programme is demand led, offering employers the flexibility to choose which apprenticeships they offer, how many and when. We are making it easier for employers and providers to offer high-quality apprenticeships by simplifying our systems, cutting red tape, and have removed the limit on the number of apprentices SME’s can recruit.”
Multiply underspend revealed
Treasury’s supplementary estimates also show that £14 million of the DfE’s budget for the prime minister’s flagship maths programme Multiply is to be returned to Treasury in 2023-24.
Councils attacked the inflexible funding rules of the maths programme last year after figures revealed that a third of the money allocated went unspent.
The DfE said most of the £14 million surrendered to Treasury, £9 million, was from financial year 2022-23, confirmed when local areas submitted their final statements of grant expenditure and driven by the short delivery timeframe in the first year of Multiply.
The other £5 million was returned to Treasury from a randomised control trial (RCT) budget, given that “many” trials will not commence until academic year 2024/25 and the time needed to design and mobilise RCTs, according to the DfE.
A DfE spokesperson said: “Multiply has enabled thousands of adults to undertake courses designed to boost number confidence, while giving local areas the flexibility to offer a range of innovative programmes to suit their communities.”
DfE officials have a challenging job each year managing the programme budget against the real-time demands of employers and allowing for the so-called carry-in and completion costs of programmes in the following years’ budgets for courses that last more than 12 months. In this sense hitting 98% year-end for a £2.6bn budget is like landing on a sixpence – a very laudable achievement.
But £60m isn’t peanuts in the current economic climate and so it’s a struggle to understand why any money is handed back. It could have been used for example to fund more incremental increases in funding bands. Care at £5k instead of £4k in a week when the Home Office has announced a doubling of visas for foreign care workers? We should be using apprenticeships to invest in home grown talent.
Rather than focusing on the % of the apprenticeship budget that is spent, it should be the % of the total that the apprenticeship levy is generating that is highlighted and pushed towards 100%