Question to the Department for Education:

To ask Her Majesty's Government whether there has been a underspend of the apprenticeship levies in each of the last three years; if so, by how much; and what consideration they have give to allowing any such underspends to be allocated to training schemes for the upgrade of skills.

Spending on the apprenticeship programme is demand-led. Employers choose the type, quantity and level of apprenticeships that they offer in order to meet their current and future skills needs.

Employers pay the apprenticeship levy to Her Majesty’s Revenue and Customs. Employers in England can then set up accounts on the apprenticeship service, allowing them to direct funds to cover the costs of training and assessment for their apprentices. Employers who pay the levy have up to 24 months to spend their levy funds in their accounts. We do not anticipate that all employers who pay the levy will need or want to use all of the funds in their accounts, but they are able to do this if they wish.

There is a difference between what employers see in their levy accounts and the department’s annual apprenticeship budget set by Her Majesty’s Treasury (HMT). Levy accounts include up to 24 months of levy funds. The department’s annual apprenticeship budget must fund the whole apprenticeship programme, including apprenticeships with smaller employers who do not pay the levy and apprenticeships that started before the levy was introduced.

In total, in the 2017-18 financial year, the department spent £1.6 billion (of a £2 billion budget) to fulfil employers’ demand for apprenticeships. Lower than anticipated demand from employers led to an underspend of approximately £400 million. HMT made available a portion of the department's 2017-18 underspend, including the underspend from apprenticeships, for programmes in future financial years. We will publish the expenditure from this financial year in our 2018-19 annual report and accounts after the end of this financial year.

A review of the levy is underway in order to consider, amongst other points, how it can be used most effectively.