Asked by: Nic Dakin (Labour - Scunthorpe)
Question to the Department for Education:
To ask the Secretary of State for Education, pursuant to the Answer of 23 April 2019 to Question 243426, what estimate his Department has made of the proportion of levy funds in employers’ accounts that will (a) expire and (b) be spent on apprenticeships before they expire; and if he will make a statement.
Answered by Anne Milton
Levy-paying employers have up to 24 months from the point at which funds enter their account to spend the funds available. The 24 month expiry period is designed to give employers time to develop their apprenticeship programmes whilst encouraging employers to take action to create new apprenticeship opportunities. Funds will only expire on a month by month basis from May 2019 if an employer has spent less on apprenticeship training and assessment in the past 2 years than the amount that went into their account in May 2017.
We do not anticipate that all levy-payers will use all the funds in their accounts, though they are able to. Income from the levy is used to fund apprenticeship training for both levy paying and non-levy paying employers.
Levy-paying employers are now able to transfer up to 25% of the annual value of their levy funds to other employers.
In May 2019, the 24-month expiry date will be reached for the earliest declared levy funds. We forecast that when the first ‘expiry’ period arrives in May, approximately £12 million pounds will remain unspent, representing 9% of the total levy funding that employers collectively paid in April 2017.
Asked by: Nic Dakin (Labour - Scunthorpe)
Question to the Department for Education:
To ask the Secretary of State for Education, how many apprenticeships there are in non-levy paying businesses; what other Government programmes will be funded by expired apprenticeship levy funds; and if he will make a statement.
Answered by Anne Milton
In the first half of 2018/19 academic year there have been 214,200 apprenticeship starts reported to date. Of these, 105,700 (49%) starts have been directly supported by funds from levy payer’s apprenticeship service accounts. There have also been 108,500 (51%) starts which have not been supported directly by levy funds, and the majority of these starts will be with non levy-paying employers.
We publish data on apprenticeship starts on a monthly basis at:
https://www.gov.uk/government/collections/further-education-and-skills-statistical-first-release-sfr.
In the 2019-20 financial year, the annual funding allocated to the Department for Education for apprenticeships in England is over £2.5 billion. This funding is distinct from levy receipts and is used to fund new apprenticeship starts for both levy and non-levy paying employers, and to cover the ongoing costs of apprentices that are already in training. It is therefore not possible to provide data on how many apprenticeship starts have been funded by unspent employer levy funds as all apprenticeship starts are funded from the Department for Education’s budget. At present, there are no plans to spend expired levy funds on programmes other than apprenticeships.
Asked by: Nic Dakin (Labour - Scunthorpe)
Question to the Department for Education:
To ask the Secretary of State for Education, whether he has received representations from employers on the effect of the 20 per cent off-the-job training standard on delivering apprenticeships.
Answered by Anne Milton
The requirement for a minimum of 20% off-the-job training is an important quality requirement and one of the core, longstanding principles of an apprenticeship.
We work with employer representative bodies to ensure policy and funding rules are well understood and to gain insight into how apprenticeships are being delivered. There are a number of employers represented on our Apprenticeships Stakeholder Board where the off-the-job training has been discussed. The effect of the 20% off-the-job training standard is frequently raised with me when I meet businesses.
We have recently issued updated off-the-job training guidance and products to support employers, training providers and apprentices to understand what good off-the-job training looks like and the benefits of it. These were developed in response to employer feedback and were tested with stakeholders prior to publication.
Asked by: Nic Dakin (Labour - Scunthorpe)
Question to the Department for Education:
To ask the Secretary of State for Education, pursuant to the Answer of 23 April 2019 to Question 243426 on apprenticeships: Taxation, what steps his Department is taking to increase the amount of apprenticeship levy funds that employers are using; and if he will make a statement.
Answered by Anne Milton
We continue to work with levy-paying employers to make sure that they can make the most of the opportunities that our reforms present, and we’ve responded to their feedback. In April 2019, we increased the amount that levy-payers can transfer to smaller employers or other organisations from 10 to 25% of their funds each year, helping them use their levy funds to support apprenticeship starts in their supply chain or meet local skills shortages.
The number of employer-designed apprenticeship standards available now stands at 440, giving employers more choice than ever and allowing them to spend their levy funds to develop the skills they need.
Since April 2016, we have provided ongoing face-to-face support for over 1,100 of the largest levy-paying employers through our national account managers. Since April 2018, we have extended support over the phone to a further 3,500 large levy-paying employers. Our support focuses on helping these businesses to build large-scale, high-quality programmes that deliver a return on their investment.
We have also led a major awareness-raising campaign among the remaining levy-paying employers, raising awareness of the opportunity to utilise their investment and helping them understand how to use transfers.
Asked by: Nic Dakin (Labour - Scunthorpe)
Question to the Department for Education:
To ask the Secretary of State for Education, what estimate he has made of the proportion of employer apprenticeship levy funds that will be used in (a) 2019, (b) 2020, (c) 2021 and (d) 2022; and if he will make a statement.
Answered by Anne Milton
Since 2017, we have introduced substantial changes to the apprenticeship funding system that make it challenging to predict the proportion of levy funds that will be used this year and over the next few years.
The apprenticeships system is now employer-led and so employers can choose which apprenticeships they offer and when. This means that the use of levy funds is a matter for individual employers. We do not expect employers to use all of their levy funds, but they are able to.
The provider and employer market continues to adapt to the reforms to the apprenticeships system that were made in 2017. We have also made additional changes to funding policy this year, increasing the cap on transfers from 10% to 25% and are reducing co-investment for small employers from 10% to 5%. The effect of these changes on behaviour will only become apparent in the future.
In combination, these factors mean that it is not possible to make a single reliable estimate of future levy usage.
When the reforms were designed, we estimated that employers would use around half of the levy funds available to them, on average, once the changes to the apprenticeships programme had bedded in. However, levy-paying employers have taken on fewer starts and used a smaller proportion of their levy funds than anticipated. Nevertheless, we expect employers to use an increasing proportion of their levy funds as they continue to develop their use of apprenticeships, and as a consequence of employers choosing more higher-cost, higher-level apprenticeships since 2017.
The forthcoming Spending Review, announced by my right hon. Friend, the Chancellor of the Exchequer at Spring Statement, will determine the level of funding for the apprenticeship programme from April 2020. As part of this process we will consider any changes that may be required to future funding arrangements, and the impact this might have on employers’ use of their levy funds. Until then it is not possible to estimate employers’ use of their levy funds from 2020 onwards.
Asked by: Nic Dakin (Labour - Scunthorpe)
Question to the Department for Education:
To ask the Secretary of State for Education, what assessment his Department made before the introduction of the apprenticeship levy of the (a) proportion of apprenticeship levy funds that employers would use, (b) number of apprenticeships that would be delivered and (c) amount of employer apprenticeship levy funds that would be unspent between 2017 and 2019; and if he will make a statement.
Answered by Anne Milton
In forecasts made before the introduction of the apprenticeship levy, it was anticipated that employers would use 13% of the levy funds available to them in the 2017-18 financial year. Data from the apprenticeship service show that employers used 9% (£191m) of the funds available to them in 2017-18.
Our annual budgets for the current Spending Review period (to the end of the 2019-20 financial year) were set to fund 3 million high quality apprenticeship starts by 2020, based on the mix of training levels and subjects that we expected employers to choose.
The apprenticeship levy helps to fund all apprenticeships for levy and non levy-paying employers. At the time that the levy was introduced, it was anticipated that a proportion of levy funds would remain unspent by employers. We have anticipated that employers will not use all the funds available to them, though they are able to.
The annual apprenticeships budget, set in advance by HM Treasury, is not dependent on levy receipts and must fund all learners in the system. When allocating this budget to fund apprenticeships, we included sufficient flexibility to accommodate variations in the level of employer demand.
Asked by: Nic Dakin (Labour - Scunthorpe)
Question to the Department for Education:
To ask the Secretary of State for Education, how many apprenticeship starts have been funded by unspent employer levy funds in (a) 2018 and (b) to the end of March 2019.
Answered by Anne Milton
In the first half of 2018/19 academic year there have been 214,200 apprenticeship starts reported to date. Of these, 105,700 (49%) starts have been directly supported by funds from levy payer’s apprenticeship service accounts. There have also been 108,500 (51%) starts which have not been supported directly by levy funds, and the majority of these starts will be with non levy-paying employers.
We publish data on apprenticeship starts on a monthly basis at:
https://www.gov.uk/government/collections/further-education-and-skills-statistical-first-release-sfr.
In the 2019-20 financial year, the annual funding allocated to the Department for Education for apprenticeships in England is over £2.5 billion. This funding is distinct from levy receipts and is used to fund new apprenticeship starts for both levy and non-levy paying employers, and to cover the ongoing costs of apprentices that are already in training. It is therefore not possible to provide data on how many apprenticeship starts have been funded by unspent employer levy funds as all apprenticeship starts are funded from the Department for Education’s budget. At present, there are no plans to spend expired levy funds on programmes other than apprenticeships.
Asked by: Nic Dakin (Labour - Scunthorpe)
Question to the Department for Education:
To ask the Secretary of State for Education, what assessment he has made of the Government’s progress on delivering three million apprenticeships by 2020; and if he will make a statement.
Answered by Anne Milton
In 2015 we set an ambitious goal of 3 million high quality apprenticeships by 2020 and that remains our ambition, but we will not sacrifice quality to meet this figure. We have introduced a wide range of reforms to apprenticeships to improve their quality and to encourage employers across England to increase the number of apprenticeships that they offer.
There have been 1,709,500 apprenticeship starts in England between May 2015 and January 2019.
We regularly report on progress toward the target in our apprenticeships and traineeships publications, which is available at: https://www.gov.uk/government/statistical-data-sets/fe-data-library-apprenticeships.
To support all employers to make the long-term, sustainable investment in training, in April 2019 we halved the co-investment rate from 10% to 5% for new starts and have increased the amount that levy-paying employers can transfer to other employers from 10% to 25%.
We are working to raise awareness of apprenticeships across the country and the benefits that they bring to both employers and apprentices. Our ‘Fire It Up’ communication campaign seeks to change the way that people think about apprenticeships and to demonstrate that apprenticeships are an aspirational choice for anyone.
Asked by: Nic Dakin (Labour - Scunthorpe)
Question to the Department for Education:
To ask the Secretary of State for Education, what assessment he has made of the importance of Level 2 and Level 3 apprenticeships in delivering three million apprenticeships by 2020; and if he will make a statement.
Answered by Anne Milton
Our reforms allow employers to choose the type, quality, level and frequency of apprenticeships that they offer in order to meet their current and future skills needs.
Level 2 and 3 apprenticeships play an important role in meeting these needs as well as providing valuable opportunities for individuals. Apprenticeships at these levels still account for the vast majority of apprenticeship starts. For example, in the first half of 2018/19, there were nearly 175,000 starts at levels 2 and 3, which represents 82% of total starts for the period.
There are now 440 industry-designed standards, of which 269 are at levels 2 and 3, meaning there are apprenticeship opportunities at all levels. During the first half of 2018/19, nearly 60% of starts were on these new standards. We can see that employers are moving quickly to this new higher quality offer.
Asked by: Nic Dakin (Labour - Scunthorpe)
Question to the Department for Education:
To ask the Secretary of State for Education, what criteria his Department is using to assess the performance of the apprenticeship levy; and if he will make a statement.
Answered by Anne Milton
We have implemented a range of reforms to ensure more high quality apprenticeship opportunities, including the introduction of the apprenticeship levy, new funding system and industry-designed standards. Our reforms are still relatively recent and it will take time for the full benefits of the apprenticeships programme to be realised.
Our apprenticeships reform programme benefits realisation strategy, published in March 2017, sets out a broad range of performance measures for the programme. Measures include the number of apprenticeship starts, earnings upon completion, results from employer and learner surveys and the Further Education (FE) Skills Index, which is a measure of the productivity impact of the programme over time.
The Skills Index enables us to compare the value of skills investments across the FE sector, including apprenticeships. The Skills Index looks at the number of learners and the employment rate for those learners as well as expected additional earnings. We have added a value of 2% to apprenticeships between the 2016/17 and 2017/18 academic years which we attribute to an increased volume of advanced and higher apprenticeship achievers as well as a small shift towards sectors with higher wage returns.
We publish annual updates against our progress. Our last update, published on 30 April 2019, can be found at: https://www.gov.uk/government/publications/apprenticeship-reform-programme-benefits-realisation-strategy.