New probe points to major flaw in apprenticeship levy

Hundreds of millions of pounds raised by employers and intended to pay for apprentices has not been used and has instead paid back to the government, according to figures released under the Freedom of Information act.

The data obtained by the BBC showed that 55 of the largest employers in England each released more than £1m back to the government after the money was not used to train apprentices.

In total, almost 5,000 companies in England relinquished £401m of funding raised by the apprenticeship levy back to the government.

The FTA said the system was flawed and that the levy needed to be reformed.

The figures, released by the Education and Skills Funding Agency (ESFA), also showed that 746 employers each gave up more than £100,000 of apprenticeship funds and a further 2,378 released more than £10,000.

The amount of money returned unspent has been increasing each month and had reached £82m in December 2019.

The ESFA said it did not collect data on which sector each levy account corresponded to.

However, the FTA said the figures showed that the payments were “essentially a secondary tax” for businesses in the logistics sector.

Sally Gilson, FTA head of skills policy, said: “The FTA needs the government to realise that the hundreds of millions of pounds in unused apprenticeship funding points towards a flaw in the current system.

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“Logistics businesses have now been paying into the apprenticeship levy for the past three years without suitable standards against which to draw down funding.

“With the sector facing a ticking employment time bomb – 64% of transport and storage businesses are now facing severe labour shortages – the levy needs urgent reform to enable businesses to access this vital resource.”

Gilson said turning the apprenticeship levy into a skills levy would allow previously unused sums to be utilised for flexible training programmes.

Nigel Cook, Elddis Transport MD said: “Our business pays into the apprenticeship levy and only gets a fraction back out.

“We would love to take that money and invest it in the training that our industry actually needs, i.e. creating a new generation of skilled HGV drivers.”