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<p>UK employers with an annual pay bill above £3 million pay the apprenticeship levy,
which is collected by HM Revenue & Customs. The government introduced the apprenticeship
levy to incentivise larger businesses to develop and invest in their own apprenticeship
programmes whilst ensuring the availability of funding for smaller employers wanting
to offer apprenticeships. Through the levy, the government is increasing investment
in the apprenticeships system in England to £2.7 billion in the 2024/25 financial
year to support employers of all sizes build their workforces. As the apprenticeships
levy is UK wide, income from the levy also supports the Devolved Administrations to
invest in their skills programmes.</p><p>In England, employers can use their levy
funds for apprenticeships in their own business or transfer their funds to support
apprenticeships in other businesses. Funds that levy payers do not draw on is used
to fund apprenticeships in small and medium sized businesses. Levy payers are not
expected to use all funds available to them, though they are able to do so.</p><p>Employers
in England who pay the apprenticeship levy can access funds for apprenticeship training
and assessment by registering for an apprenticeship service account. The funds in
employers’ accounts reflect the ‘English percentage’ of an employer’s levy contribution
and include a 10% top-up from the government.</p><p>The funds available to levy-paying
employers through their apprenticeship service accounts does not represent the total
spend on apprenticeships for levy-paying empoyers and is not the same as the apprenticeships
budget which funds apprenticeships for employers of all sizes. On average, 98% of
the apprenticeships budget has been spent in the last two financial years.</p><p>The
table below shows the number of levy-paying employers that have spent more than 50%
of the funds declared in their apprenticeship service accounts, including the 10%
top-up from the government, in each financial year from 2018/19 to 2022/23.</p><table><tbody><tr><td><p>FY</p></td><td><p>Number
of employers who spent more than 50% of levy funds</p></td><td><p>Percentage of total
employers who spent more than 50% of levy funds</p></td></tr><tr><td><p>2018/19</p></td><td><p>4,210</p></td><td><p>27%</p></td></tr><tr><td><p>2019/20</p></td><td><p>6,000</p></td><td><p>36%</p></td></tr><tr><td><p>2020/21</p></td><td><p>6,080</p></td><td><p>35%</p></td></tr><tr><td><p>2021/22</p></td><td><p>6,580</p></td><td><p>35%</p></td></tr><tr><td><p>2022/23</p></td><td><p>6,970</p></td><td><p>35%</p></td></tr></tbody></table><p>
</p><p> </p><p>The department is supporting employers to make greater use of their
levy and have improved the transfer system to make it easier to find other employers
who wish to take on apprentices with transferred funds. In April 2019, the department
increased the transfer allowance from 10% to 25%, so levy-paying employers could transfer
more of their annual funds to support any employer. Since September 2021, over 500
employers, including ASDA, HomeServe, and BT Group, have pledged to transfer over
£33 million to support apprenticeships in businesses of all sizes. The table below
shows the number of levy-paying employers who spent all of their transfer allowance
in each financial year from 2018/19 to 2022/23.</p><table><tbody><tr><td><p>FY (of
allowance calculation)</p></td><td><p>Employers who used all their transfer allowance</p></td><td><p>Percentage
of total employers who used all their transfer allowance</p></td></tr><tr><td><p>2018/19</p></td><td><p>70</p></td><td><p>0.4%</p></td></tr><tr><td><p>2019/20</p></td><td><p>170</p></td><td><p>1.0%</p></td></tr><tr><td><p>2020/21</p></td><td><p>280</p></td><td><p>1.6%</p></td></tr><tr><td><p>2021/22</p></td><td><p>370</p></td><td><p>2.0%</p></td></tr><tr><td><p>2022/23</p></td><td><p>270</p></td><td><p>1.4%</p></td></tr></tbody></table><p>
</p><p> </p><p>With regard to allowing levy-paying employers to use their funds on
non-apprenticeship training schemes and courses, I refer the noble lady to the answer
of 10 November 2023 to Question <a href="https://questions-statements.parliament.uk/written-questions/detail/2023-11-07/614"
target="_blank">614</a>.</p>
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