UK business has £1bn in unspent apprenticeship levy cash


The government faces new calls to overhaul the apprenticeship levy after it emerged that more than £1 billion has recently gone unspent by businesses.

The expired levy funds in the nine months from last May was a record amount, surpassing the £847 million that was returned to the government between May 2019 and last April.

Make UK, the manufacturing trade body, said that the rise in unused money should prompt the government to revamp the scheme to ensure that levy funding can be better used, particularly as the economy starts to rebound from the fallout from the coronavirus pandemic.

Under the levy, which was started four years ago, employers that have a wage bill of more than £3 million are required to pay the equivalent of 0.5 per cent of their total annual pay bill into pot, which is earmarked for training.

Employers have 24 months to use the money and any funds that are unspent after that expire and are returned to the government. Gillian Keegan, the apprenticeships and skills minister, disclosed last month that £1.039 billion had expired unused from last May to this February.

There have long been calls for the levy to be restructured, including last month, when the bosses of some of Britain’s biggest companies, including Tesco and Vodafone, said the scheme should be revamped as part of a “national prosperity” plan in the wake of the pandemic.

Make UK has now also urged a rethink. Its proposals include releasing a fifth of levy funds immediately to cover the wages of apprentices and an extensive review of the scheme by the end of next year.

Bhavina Bharkhada, of Make UK, said: “For many manufacturers, apprenticeships are key to unlocking our recovery, and building a strong industrial base in the UK. But they need more flexibility to do this effectively as they themselves are struggling to recover from the Covid crisis.

“With so many manufacturers looking to recruit an engineering or manufacturing apprentice in the next 12 months, apprenticeships in the UK manufacturing sector can address the yawning skills gap we face, and aid the government in its ambition to level up.”