80% of levy-paying employers have hired no apprentices

Some £3bn of apprenticeship levy contributions from large businesses - three-quarters of the total - remains unspent, figures show

George Ryan

Four in five employers that have paid towards the apprenticeship levy have yet to hire a single apprentice

Four in five levy-paying businesses have yet to take on a single apprentice, new figures reveal.

Responding to freedom of information requests from the Open University, HM Revenue and Customs confirmed that 53,449 individual employers have paid towards the apprenticeship levy. Of these, the Education and Skills Funding Agency (ESFA) confirmed that 10,417 employers had accessed their digital apprenticeship service accounts and made at least one commitment to hire an apprentice up until December 2018. This means that at more than 80 per cent of levy-paying firms, there has not been a single new hire or existing member of staff embarking on an apprenticeship.

Data supplied by the ESFA also shows just 14 per cent of the total funds paid by apprenticeship levy employers have been spent. Between April 2017 and December 2018, employers drew £480 million from digital apprenticeship service accounts, leaving more than £3 billion unspent.

Employers have two years to spend funds in their digital accounts. From May, unspent levy funds will return to the Treasury on a monthly basis. Assuming there is not a last-minute surge in apprenticeship commitments, around £168 million is set to return to the Treasury in May alone.

Apprenticeships: employers 'miss a golden opportunity' 

The apprenticeship levy was introduced in April 2017 and is paid by all employers with a payroll of more than £3 million, and it is paid monthly at a rate of 0.5 per cent of a company’s total wage costs. Employers in England can then access these funds through an online account to cover the costs of training apprentices.

David Willett, corporate director at the Open University, said employers are missing out on a “golden opportunity” to close skills gaps and ensure that their organisations are equipped to handle upcoming challenges.

He added: "The lack of consistency from tweaks to the levy system and funding bands is having a profound effect on organisations, leaving many unable to make long-term strategic decisions about training and skills. Others simply need more support to help them develop a strategy or access the funding, and that’s where we can help.”

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