Question to the Department for Education:

To ask Her Majesty's Government what plans they have to reform the apprenticeship levy; and what plans they have to redistribute unused funds from the apprenticeship levy to other forms of post-16 education and training.

The apprenticeship levy is an important part of our reforms to apprenticeships. As well as funding new apprenticeships for levy-paying employers, income from the levy is used to fund new apprenticeships for employers that do not pay the levy, as well as existing apprentices that started in previous years. Levy-paying employers have 24 months in which to spend the funds available to them before they begin to expire on a rolling, month-by-month basis.

We do not anticipate that all employers who pay the levy will need or want to use all the funds available to them, but they are able to do so if they wish. Expired apprenticeship levy funds are not lost but are used to support apprenticeships in smaller employers and to cover the ongoing costs of apprentices already in training.

Apprenticeships are vital in driving economic recovery, and we continue to improve apprenticeships to make it easier for employers to make full use of their levy funds. Levy-paying employers can transfer up to 25% of their annual funds to help support apprenticeship starts in their supply chain or to meet local skills needs. As announced at the Spending Review by my right hon. Friend, the Chancellor of the Exchequer, we are improving the apprenticeship levy transfer process so that, from August 2021, employers who pay the levy will be able to pledge funds for transfer to other employers, including small-medium enterprises (SMEs), supported by a new online service to match levy payers with SMEs.

In addition, we are making apprenticeships more flexible so that they better meet the needs of employers from all sectors. We continue to support employers by encouraging greater use of innovative apprenticeship training models, such as the front-loading of off-the-job training. We are also developing accelerated apprenticeships so that apprentices with substantial prior learning (e.g. T Level graduates) can complete an apprenticeship more quickly.

We currently have no plans to review what apprenticeship levy funds can be spent on.