A total of £157 million of apprenticeship funding expired in April of this year alone, Labour’s apprenticeships and skills minister Toby Perkins has said. That is the highest monthly amount since May 2019 and the most recent month for which data is available. 

In a video recorded by Mr Perkins and published by Tes this afternoon, the shadow minister said many smaller businesses that had been offering apprenticeships had been shut out of the system following the government’s reform and the introduction of the levy. 

“In April 2021 alone, £157 million of expired apprenticeship levy fund remained unspent and we’ve seen since the pandemic the government’s incentives are just not enough to deal either with the number of apprentices who are losing their jobs or the lack of new starts.

“Labour has proposed an apprenticeship wage subsidy using a portion of those funds to actually support businesses to take on 16- to 24-year-old apprentices to try and make sure we reduce the huge amount of youth unemployment we’ve seen escalating.”

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Large businesses across the UK have been paying the apprenticeship levy since April 2017. The funds raised in that way stay in a virtual account which these businesses can then use to fund apprenticeship training. However, any money not spent within two years is returned to the Treasury. 

Figures released by Gillian Keegan in response to a parliamentary question from Mr Perkins show the monthly amount of levy funding that expired - ranging from £11 million in May 2019 - two years after the levy was first introduced, to £157 million in April of this year, after the number of apprenticeship starts dropped markedly because of the coronavirus pandemic. 

In her response, Ms Keegan said: “We do not anticipate that all employers who pay the levy will need or want to use all the funds available to them, but they are able to if they wish. As well as funding new apprenticeships in levy-paying employers, income from the levy is used to fund new apprenticeships in employers that do not pay the levy, as well as existing apprentices that started in previous years.”

Jane Hickie, chief executive of the Association of Employment and Learning Providers, said: “Toby Perkins is right to say that we have got to find a way to channel more levy funding towards smaller businesses. The demand is there and so there is no reason for money to be handed back to the Treasury.”

A Department for Education spokesperson said: “We know not all levy paying employers will use or want to use all of the funds available to them. Any unspent funds in their accounts do not go to waste, but are used to to fund new apprenticeships in employers that do not pay the levy, as well as existing apprentices that started in previous years.

“Levy payers also have the option to transfer up to 25 per cent of their levy funds to other employers, and many employers including Amazon are now doing so. We are also making it easier for levy-payers to transfer unspent funds and making training more flexible to meet the needs of different sectors. We have already committed to improve the working of the levy and will be making improvements in response to employers’ feedback.”