Employers lose £2bn over last two years as they struggle to spend their Apprenticeship Levy funds, new CIPD analysis finds

Plans in the Queen’s Speech as part of the Government’s ‘Levelling up’ agenda will be undermined unless the Apprenticeship Levy is made more flexible to allow firms to invest in other forms of accredited training and development, say CIPD. 

Government plans to create an adult education and training system that is fit for the future will be fatally flawed unless the Apprenticeship Levy is reformed, as new data shows employers have been forced to write-off £2bn of levy funds over the last two years. 

This is the view of the CIPD, who have obtained data using FOI requests which show that £1.999 billion of employers’ levy funds expired and returned to the Treasury between May 2019 and March 2021, as they were unable to use them on apprenticeships.  

The analysis from the professional body for HR and people development also shows that employers are spending increasing amounts on generic management apprenticeships. Overall, employers spent £378 million spent on just 4 generic management apprenticeship standards between 2017/18 and 2081/19, as employers seek ways of spending their levy funds.  

While employers have doubled their expenditure on management apprenticeships, in the same two years the number of apprenticeships going to young people under the age of 19 fell by 8%.  

At the same time, as CIPD revealed in March, overall employer investment in apprenticeships, including for young people, and in skills more widely has fallen since the levy was introduced. 

Ben Willmott, head of public policy at the CIPD, the professional body for HR and people development, said:  

“The Government’s ambition to revamp the further education system by boosting employer engagement with local colleges and investment in adult skills is exactly right but will be fatally undermined unless the Apprenticeship Levy is reformed.  

“Turning the Apprenticeship Levy into a more flexible training levy would enable firms to invest in other forms of accredited training and development, which would maximise their ability to work with further education colleges and universities. 

“Apprenticeships are ideal to help young people develop the skills they need for a career in an occupation but other forms of training and development are usually more suitable for existing and typically older employees and learners as they are more flexible – and provide better value. 

“Developing the skills of managers to manage people is an absolute priority for all organisations but there are much more cost effective and flexible forms of training to achieve this than through management apprenticeships.”