The apprenticeship levy has raised £400 million less than was expected in its first year of operation.

Mel Stride, financial secretary to the Treasury and paymaster general, confirmed that in 2017-18 the levy raised £2.3 billion. This was revealed in response to a written parliamentary question from shadow FE minister Gordon Marsden.

It was originally envisaged that the levy would raise £2.7 billion in its first year, although this was revised down in March by the Office for Budget Responsibility to £2.6 billion.

Mark Dawe, chief executive of the Association of Employment and Learning Providers said: “Because employers have two years to invest it, we still expect that the bulk of the money raised will be used by levy payers themselves and therefore we stand by our previous calls for a guaranteed non-levy budget of around £1 billion a year for SMEs. 

“The challenge of the next transitional phase of the apprenticeship reforms is to design an apprenticeship service for all employers that recognises that while demand cannot be limitless, the service helps to meet the priorities of social mobility, improved productivity and Brexit labour market challenges.”