Question to the Department for Education:

To ask the Secretary of State for Education, pursuant to the Answer of 8 January 2024 to Question 7553 on Apprentices: Taxation, what the process is for the reallocation of funds in apprenticeship accounts that have expired; and what the destination of those funds were in the latest period for which data is available.

The funds in levy-paying employers’ apprenticeship service accounts are distinct from, and operate on a different basis to, the department’s apprenticeships budget. The former represents funding for apprenticeships notionally available for use by individual levy-paying employers over a two-year period. The latter represents the total amount of funding available annually to support apprenticeships in England for all employers, including those who do not pay the apprenticeship levy.

The funds available to levy-paying employers through their apprenticeship service accounts are notionally hypothecated based on their levy contributions over a two-year period. These funds do not constitute a ‘physical’ pot of money; they should be considered more as credit that is available for each levy-paying employer to use if they wish.

When a levy-paying employer has an employee on an apprenticeship, their account will show their available funds being debited each month to reflect the cost of this training and assessment. In parallel but entirely separately, the training provider receives an equivalent value monthly payment directly from the department’s apprenticeships budget. These payments do not actually come from levy-paying employers’ accounts.

Since available funds in each levy-paying employer’s account are notionally hypothecated, there are no monies to ‘reallocate’ when unused funds expire after 24 months. The credit is either drawn down, and equivalent payments separately made to training providers from the department’s annual budget, or expires when not used and the department’s annual budget remains the same). The government expires funds after 24 months because otherwise levy-paying employers would accrue unreasonably large balances, with the potential to create financial commitments that the government has not planned to meet.

On average, 98% of the English apprenticeships budget has been spent over the last two financial years. If the department’s apprenticeships budget is not fully spent by the end of the financial year, funds are returned to HM Treasury in line with standard practice set out in the Consolidated Budgeting Guidance.