Question to the HM Treasury:

To ask the Chancellor of the Exchequer, with reference to the evidence from the Minister for Higher and Further Education to the Education Select Committee on 15 June 2022 and to the Answer of 6 April 2022 to Question 149235 on Apprentices: Taxation, when he plans to (a) undertake and (b) publish the review the Apprenticeships Levy; and when he plans for stakeholders to engage with the review.

As part of the Spring Statement, 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 Chancellor considers that a new culture of enterprise is essential to drive growth through higher productivity. The government’s ambition is to create the conditions for the private sector to invest more, train more and innovate more to encourage greater levels of private sector investment in employee training.

The Apprenticeship Levy is a key part of this ambition. Since its introduction in 2017, it has helped employers of all sizes and sectors invest in and train apprentices, providing their 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 quality requirements placed on apprenticeships ensure that this training is beneficial to both learners and employers, providing the key skills both parties need to succeed and preventing the rebadging of existing training.

The government continues to regularly engage with employers, training providers and other interested stakeholders of all sizes and sectors. The government recognises that employers have frustrations with the way that Apprenticeship Levy funds can be spend within the apprenticeships system. We welcome the comments of all interested parties on the workings of the apprenticeship system to ensure it continues to meet their needs.

To address these frustrations, 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 and sectors.

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.