To ask Her Majesty's Government what assessment they have made of the annual total cost of apprenticeships compared to the amount raised from the apprenticeship levy.
10 June 2019
The apprenticeship levy is collected from all UK employers through the PAYE system by Her Majesty’s Revenue and Customs (HMRC). HMRC publish information on levy receipts in the monthly Tax and National Insurance contribution receipts publication, and in their annual reports and accounts, available at:
In 2017-18, the first year following the introduction of the levy, £2.6 billion was collected from UK employers and HM Treasury (HMT) allocated £425m of the levy collected to the devolved administrations. Annual data on levy collected in 2018-19 will be published by HMRC, and data on 2018-19 spending will be available from Department for Education in due course.
Skills spending is a devolved matter and HMT committed in advance to the share of the levy that would be passed to the devolved administrations in the three-year period from 2017-18 to 2019-20. HMT published these plans at: https://www.gov.uk/government/news/uk-government-agrees-apprenticeship-levy-funding-deal-with-devolved-administrations.
In England, levy-paying employers can use online apprenticeship service accounts to access their funds. In 2017-18, the total spend on apprentices employed with levy payers, and who started training after the levy was introduced, was £268 million. This figure represents more than the £170 million in training and assessment costs charged to levy payers’ accounts.
This is because these employers also benefit from additional payments to support certain types of learners, and extremely generous co-investment contributions for those employers that have exhausted their levy account funds. Such costs are not currently deducted from levy accounts. In 2018-19, levy-payers drew down a further £639 million representing the costs charged to levy-payers on the learners who started since the levy was introduced (and whose training is ongoing in 2018-19) as well as the costs of learners who started in the 2018-19 financial year.
Employers’ levy funds are distinct from the department’s ring-fenced annual apprenticeship budget, which is set in advance by HM Treasury to fund apprenticeships in England. This budget has risen year-on-year, from £2.01 billion in 2017-18 and £2.23 billion in 2018-19 to over £2.5 billion in 2019-20, double what was spent in 2010.
In 2017-18, we spent £189 million on training and assessment (including additional payments) for apprentices with employers who do not pay the levy and who started their apprenticeship since the levy was introduced. This includes apprenticeships started on both frameworks and new standards.
The ongoing cost of training and assessment for apprentices who started their apprenticeship before the levy was introduced in May 2017 was £1,065 million in 2017-18 (including additional payments as detailed above).
In 2017-18, £40 million (equating to less than 2%) of the £2.01 billion ring-fenced apprenticeships programme budget was spent on the cost of delivering and running the programme. This includes spending by the Institute for Apprenticeships and Technical Education. The department is provided a separate budget for other administrative spending, and in 2017-18 total administrative spend was £44 million. These two budgets cover the cost of running the online apprenticeship service, employer engagement work, and the promotion of apprenticeships, in addition to staffing and other costs.