Question

To ask Her Majesty’s Government what assessment they have made of the likely impact of the apprenticeship levy on wage growth over the next five years.

The OBR forecasts that wages will grow over the next few years, though at a slightly lower rate than would have been the case had the apprenticeship levy not been introduced.

However, we know that apprenticeships have long-run productivity and wage benefits for apprentices and the wider economy, which are not included in the OBR’s modelling. On average, an apprenticeship increases an individual’s earnings by 11-16% within three to five years.[1]

The medium-term benefits of apprenticeships can therefore outweigh short-term wage pressures. We thus consider the net impact of the apprenticeships levy on the economy to be positive.

[1] https://www.gov.uk/government/publications/further-education-measuring-the-net-present-value-in-england