Question to the Department for Education:

To ask His Majesty's Government how they will use the underspend of the apprenticeship levy.

The apprenticeship levy is an important part of the government’s reforms to create a high-quality, employer-led apprenticeships system, and it supports employers of all sizes to invest in high-quality apprenticeship training.

The government, via HM Revenue and Customs, collects the apprenticeship levy of 0.5% on total payroll from businesses across the UK with a payroll of more than £3 million. From this, HM Treasury (HMT) sets an English apprenticeships budget for the department, and the devolved governments receive a share of the funding calculated using the Barnett formula.

The department’s apprenticeships budget is used to fund training and assessment for new apprenticeship starts in all employers, levy and non-levy paying employers alike, across England, and to cover the ongoing costs of apprentices already in training and any additional payments made to employers and providers. This means that levy payers’ unspent funds are used to support additional costs and apprenticeships in smaller employers.

In the 2021/22 financial year, the total spend on apprenticeships in England was £2,455 million, against the budget of £2,466 million, meaning that 99.6% of the apprenticeships budget was spent. Previous years’ spending on apprenticeships is set out in the Department’s Annual Report and Accounts, which can be accessed at: https://www.gov.uk/government/publications/department-for-education-consolidated-annual-report-and-accounts-2021-to-2022.

Any underspends in overall departmental budgets by the end of the financial year are first returned to HMT, as per the Consolidated Budgeting Guidance. As employers choose which apprenticeships they offer and when, annual spend of the apprenticeship budget is subject to employer demand.

The government is increasing apprenticeship funding to £2.7 billion by the 2024/25 financial year and has removed the limit on the number of apprentices that small and medium-sized enterprises can recruit to support more employers to benefit from the high-quality training that apprenticeships offer.