Cross-party MPs call for urgent reform of ‘number one business complaint’ Apprenticeship Levy

The annual event, organised by Barclays and the CBI, heard that complaints about the Apprenticeship Levy have outstripped even Brexit and the pandemic in recent years.

The Apprenticeship Levy was introduced in 2017 and takes 0.5 per cent of the salary bill from major employers.

A further 10 per cent is added from Government funds to create a pot for the company to spend on providing training and improving skills.

Funds that are not used within two years expire and go to Government.

There have been widespread calls for reform of the scheme, with a recent report from thinktank Onward highlighting the number of entry-level apprenticeships has fallen by more than half (56 per cent) since 2011.

Pete McManus, CBI deputy director of public affairs, told the event: “I have been at the CBI for seven and a half years and worked through Covid, through Brexit and Ukraine.

"The number one thing businesses tell me is, ‘What on earth is going on with the Apprenticeship Levy? Why is it so inflexible? It is just a tax I can’t claim back’.”

Jason McCartney, Conservative MP for Colne Valley, said Skills Minister Robert Halfon is working on addressing the situation but admitted improvements are required.

He said: “It needs to be simplified, it needs to be easier. Whenever I go and visit one of my local businesses, everyone I ask, ‘Have you got any apprentices and how many are you going to take on?’

"There is little bit of hesitancy from some businesses who are so busy doing business. We need to make it easy for them.

“It needs to be the first and easiest thing to do.”

His remarks were backed by Labour MP Hilary Benn.

Mr Benn said earlier at the event: “We have seen a fall in the number of apprentices aged under 25 by something like 40 per cent since 2010. This Apprenticship Levy is money that is going to go back to the Treasury.”

Fellow Labour MP Olivia Blake, who represents Sheffield Hallam, said: “Apprenticeships should be the easiest thing in the world and they aren’t at the moment.”

The Government argues that the Apprenticeship Levy helps support employers of all sizes to invest in high-quality training and there is flexibility in how the money is spent. Unspent funds are used to fund apprenticeships in smaller firms which do not pay the levy, as well as additional payments to employers and training providers.

Funding for apprenticeships will increase to £2.7 billion by 2024-25.

In November, Education Secretary Gillian Keegan defended the current system. “The apprenticeship levy was created to support the uptake and delivery of high-quality apprenticeships and has been set at a level to fund this employer demand, and we are making apprenticeships more flexible with new flexi job and accelerated apprenticeships so they are accessible to employers in all sectors.”

She added: “We’ve also improved the levy transfer system so employers can make greater use of their levy funds.”