Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what proportion of employers paying the Growth and Skills Levy recovered less than (a) 25%, (b) 50%, (c) 75% and (d) 100% of levy contributions through funded training in the latest year for which figures are available.

The UK wide apprenticeship levy, which is paid at a rate of 0.5% by employers with an annual pay bill of over £3 million, is not legally hypothecated and, as such, revenues from the levy are paid into the Consolidated Fund and not directly allocated to apprenticeships.

Separately, the annual growth and skills (previously apprenticeship) budget for England is set at each spending review. In the 2024-2025 financial year the growth and skills budget was 100% spent.

In England, levy paying employers access growth and skills funding through their employer accounts, which they must set up, with spend drawn from the growth and skills budget. The funds in employers’ accounts reflect the ‘English percentage’ of an employer’s levy contribution and currently include a 10% top up from the government.

The table below shows the breakdown of spend by levy payers from their employer accounts in the 2024/25 financial year. To note, levy funds currently accrue in employer accounts for 24 months before they expire and so it is possible for levy payers to spend more money than entered their account over a 12-month period.

*Proportion is based on active levy paying employer accounts that either declared levy and/or made a payment in 2024/25 FY.

We recognise that the design of the current system can create confusion by showing large balances in levy accounts that are not consistent with the actual funding available from the annual growth and skills budget.

This is because the funds in employers accounts are notional and, at around £6.7 billion currently, far exceed the total levy paid by employers annually and are more than double the annual budget.

If all levy paying employers spent all their notional levy funds, we would far exceed the available budget, and there would be no funding available to train apprentices at non-levy paying employers which are typically SMEs. Currently, nearly 30% of apprenticeship spending is on apprentices employed by non-levy payers.

From August, we are making changes to remove the 10% government top-up and reduce the expiry period of levy funds to 12 months, which will tackle this illusion of excess funds and ensure that levy balances are more closely aligned with the actual growth and skills budget.

Despite record investment, with the growth and skills budget in England increasing to £3.3 billion for the 2026-27 financial year, these changes are needed to ensure the sustainability and affordability of the programme.