An analysis of the Apprenticeship Levy by the Chartered Institute of Personnel and Development (CIPD) found that employers lost out on £2 billion in apprenticeship training funds and the government scheme had 'failed'.

Employer investment in training has declined, overall apprenticeship starts have fallen and far fewer apprenticeships have gone to young people. 

The Apprenticeship Levy applies to companies in England with an annual wage bill of over £3 million. The levy, equivalent to 0.5 per cent of salary costs, must be paid to the Treasury if it is not used within two years and according to the CIPD over £2 billion has not been used. 

Key data used for the CIPD’s four-year performance assessment of the levy shows that:  

  • Total apprenticeship starts have fallen from 494,900 in 2016/17 to just 322,500 in 2019/20.
  • The number of apprenticeships going to under 19s has fallen from 122,800 in 2016/17 year to just 76,300 in 2019/20. 
  • The number of apprenticeships going to 19-24 year-olds has declined from 142,200 per year to 95,300 per annum over the same period.
  • Overall employer investment in training (which the levy was supposed to boost) has also declined, with employer-funded off-the-job training in England falling by £2.3bn between 2017 and 2019.
  • The current funding arrangements are also failing smaller organisations. In 2016 11% of small businesses (less than 50 employees) had apprentices in their organisations, but by 2019 this had fallen to just 9%.

CIPD Chief Executive, Peter Cheese, said,

"A more flexible skills levy would mean employers could use it to develop existing staff through other forms of accredited training and skills development which are cheaper and usually much more suitable for employees aged 25 and over, leaving more money to invest in apprenticeships for young people who most need them."

Useful guides on this topic    

Apprenticeship levy (employers' briefing)
From 6 April 2017, an apprenticeship levy is payable by the largest employers based on payroll costs. Smaller employers are mainly exempt from the levy, although the way that they will receive funding for training also changes.

Register to manage your apprenticeship funds
You can register your organisation and add the details of your PAYE schemes so that you can manage the levy and employ apprentices.

A Plan for Jobs 2020: Helping the unemployed
In his Summer economic update's ‘Plan for Jobs 2020,’ the Chancellor announced new schemes to help young unemployed people, create more apprenticeships and support those who lose their jobs to get back into the labour market quickly. 

External links

Apprenticeship Levy analysis from CIPD

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