Question to the HM Treasury:

To ask the Chancellor of the Exchequer, with reference to the Spring Statement of 23 March 2022, what the process will be for his review of the working of the Apprenticeships Levy; and whether there will be an opportunity for (a) employers, (b) trades unions, (c) colleges and other training providers, (d) hon. Members, (e) councils and (f) other stakeholders to submit evidence to that review.

As part of the Spring Statement, the Chancellor set out that he considers that a new culture of enterprise is essential to drive growth through higher productivity. Therefore, the government wants to create the conditions for the private sector to invest more, train more and innovate more.

As part of this work, the Chancellor committed to examining the tax system, including the operation of the Apprenticeship Levy, to determine whether it is doing enough to incentivise businesses to invest in the right kinds of training needed for the economy to strengthen and grow.

The government’s ambition is to encourage greater levels of private sector investment in employee training, both for apprentices and for employees more generally.

The Apprenticeship Levy is a key part of this ambition, it is helping employers invest in and train apprentices which provide businesses with the skills they need to meet their customers’ needs and grow. Employers who pay the Apprenticeship Levy can invest their funds in high-quality apprenticeship training, while the government covers 95 percent of the training costs for employers who do not pay the Levy using unspent levy funds.

The government has already transformed apprenticeships – which are jobs with training for anyone of any age, at any level or stage of their career – to align with employer needs. Since the announcement of the Apprenticeship Levy in May 2015, over 2.7 million apprenticeships have begun.

The government regularly engages with employers, training providers and other interested stakeholders. The Government has recognised that some employers have frustrations with the way that Apprenticeship Levy funds can be spend within the apprenticeships system.

To address these concerns, the Government has delivered various improvements to the apprenticeship system. These include the launch of Flexi-Job Apprenticeship Agencies – with 10 employers receiving a share of £5 million of funding to set up - and the introduction of the Pledge and Match Levy transfer system. Since launching in September 2021, 110 employers including Amazon UK, DPD and HomeServe have pledged to transfer over £7 million to support apprenticeships in businesses of all sizes.

While there will not be a formal review of the Apprenticeship Levy or system, the government is committed to protecting the quality of apprenticeship training and making further improvements to the system to respond to the legitimate concerns raised by employers. The Chancellor will update the House further in the Autumn.