Treasury pockets £750million raised by apprenticeship levy – instead of spending it on training

THE TREASURY has pocketed £750million raised by the apprenticeship levy last year rather than spending it on training.

Experts said the alarming figures show the system is in desperate need of reform to help more businesses take on much-needed apprentices.

Under a ‘use it or lose it’ approach, businesses have to cough up for levy, and any cash unspent goes to No11 coffers.

Some £3.2 billion was raised via the levy in the year ending April 2022 but just £2.45 billion was spent.

This means the Chancellor banked a whopping £750m from the tax last year.

Over the past five years No11 has snaffled £4.4bn from the fund, the Policy Exchange think-tank said.

The numbers were unearthed in parliamentary questions (PQs) tabled by Lord Dean Godson, director of Policy Exchange.

Ian Mansfield, head of education at the think-tank, said: “It is shocking that, over the last five years, £4.4bn raised by the Apprenticeship Levy has not been used to support apprenticeships.

“Levy payers must be given more flexibility to train workers in the skills the economy needs.

“And some of this surplus should be recycled to support SMEs to take on more apprentices – particularly those under 25.

“Rishi Sunak’s £3,000 incentive payment during the pandemic boosted apprenticeship starts by 21 per cent.

“A similar scheme, more focused on young apprentices, would do wonders to increase the opportunities available to young people leaving school or college.”

Answering the PQs, schools minister Baroness Barran said: “The apprenticeships budget is used to fund training and assessment for new apprenticeship starts for all employers in England, to cover the ongoing costs of apprentices already in training and any additional payments made to employers, providers, and apprentices.

“The annual apprenticeship budget is set by HM Treasury.”

Trending In The News on Sunday is calling for the government to do more to train apprentices in our Builder Better Britain campaign.

A Government spokesman said: “The apprenticeships levy has helped us to grow the apprenticeship budget to £2.7bn a year by 2024-25 – supporting employers of all sizes and in all sectors to benefit from the high-quality training that apprenticeships offer.

“Where there are underspends from levy paying employers, these are re-allocated to fund demand for apprenticeships from smaller employers.

“In the last financial year, we were encouraged to see employers utilised over 99% of the apprenticeship budget.

“While the Apprenticeship Levy is UK-wide, the Apprenticeship Budget is England only.

“Once Barnett consequentials ae applied, overall UK spending rises to £3.2bn.”