The Latest Levy ‘Underspend’ Figures Revealed

The Association of Employment and Learning Providers (AELP) has today responded to the latest government data showing that the Department for Education recorded a £96m apprenticeship underspend in the financial year 2022-23.

Figures published in response to a parliamentary question by Lord Storey have shown that the total amount of apprenticeship levy unspent and returned to the Treasury for 2022/2023 amounted to just under £100m. Despite this, the overall DfE apprenticeship programme budget increased in the last year to £2,554m and actual spending on apprenticeship training and assessment increased.

In the prior year (FY21-22), 99.6% of the DfE’s apprenticeship programme budget (£2,466m) was spent, however this did include over £200m of employer incentive payments which were funded through the Plan for Jobs initiative as part of the Covid-19 recovery programme. In the first five months of this financial year the apprenticeship levy take has continued to increase, up by 8% (£123m) on the first five months compared to the same period the previous year. 

AELP have called for the DfE apprenticeship programme budget to be more closely aligned to the overall levy take and for this to introduce a minimum funding threshold of £5k per year for all standards and an across-the-board increase in apprenticeship funding so payment rates more closely match the actual current costs of delivery.

At the same time, AELP is again urging the government to review the funding rates for functional skills qualifications, which are funded through the apprenticeship levy and are a key requirement alongside all level apprenticeships. The current funding rate sits at just £472 and has not been reviewed in more than ten years.

Simon Ashworth, AELP Director of Policy, said:

“Although it appears that overall spending on apprenticeships is decreasing, the programme budget increased last year. The actual spending on training and assessment is also still increasing. In the previous year, just 0.4% of the Department for Education budget was unspent, which included over £200m in ‘Plan for Jobs’ employer incentives.

“We also know that in the first five months of this financial year, the apprenticeship levy raised £123m more than the same period last year – representing an 8% increase. It is now looking more and more likely that the levy take will break through the £4bn mark for this financial year. It is vital that more of that money is allocated to properly fund apprenticeships which is its primary purpose.

“If the DfE programme budget was uplifted to align with the increasing levy take, this would not only fund a vital new minimum funding threshold but also an across-the-board increase in apprenticeship funding rates to tackle the rising costs of inflation. It would also help to address the long-standing issue of poorly funded English and maths qualifications.”