Question to the HM Treasury:

To ask His Majesty's Government whether they will provide a full breakdown of what the £3.2 billion raised by the apprenticeship levy in 2021–22, as reported by HMRC, has been spent on.

The Apprenticeship Levy is a key part of the Government’s reforms to the apprenticeship system to enable employers of all sizes to make a long-term, sustainable and high-quality investment in training.

The Apprenticeship Levy is charged at a rate of 0.5% of an employer’s annual pay bill. An annual Apprenticeship Levy allowance of £15,000 means that only those employers with an annual pay bill of over £3 million will have to pay and report the levy.

In England, the Department for Education is allocated an annual apprenticeships budget which is agreed at Spending Review. This budget is used to fund training and assessment for new apprenticeship starts in all employers – levy and non-levy paying employers alike – across England, and to cover the ongoing costs of apprentices already in training and any additional payments made to employers and providers. This means that in England, levy payers’ unspent funds are used to support additional costs and apprenticeships in smaller employers.

In the 2021-22 financial year the total spend on apprenticeships in England was £2,455 million against the budget of £2,466 million, meaning that 99.6% of the apprenticeships budget was spent. Any underspends are retained in line with standard practice as per the Consolidated Budgeting Guidance.

Apprenticeship policy and spending is devolved meaning the devolved administrations receive funding through the Barnett formula. While the Barnett formula is applied to changes in departmental funding, rather than to budgets for specific programmes, this essentially accounts for how the residual levy revenues are used. It is for the devolved administrations to allocate their funding in devolved areas as they see fit, including investing in their skills programmes.

If the employer is levy-paying, with operations based wholly or partly in Scotland, Wales or Northern Ireland, they will need to engage with the relevant funding authorities for funding apprenticeships located there. Authorities in each of the UK nations manage their own apprenticeship programmes, including how funding is spent on apprenticeship training.