Commons Sense

House of Commons · Westminster Hall

Apprenticeship Levy — [Caroline Nokes in the Chair]

11 February 2020 · 14 other contributors · 12,920 words

Opened by Richard Graham Con Gloucester

Responding minister: Michelle Donelan

Business & Trade

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Richard Graham raised concerns about apprenticeship levy — [caroline nokes in the chair] in Westminster Hall. A government minister responded.

Key points

  • Richard Graham is concerned about the effectiveness of the apprenticeship levy, noting a significant drop in level 2 and level 3 apprenticeships despite a doubling in higher apprenticeships.
  • Graham highlights issues such as delays in approving standards and administrative burdens that discourage companies from using their unspent levy funds.
  • Graham asks the Government to clarify the nature of the 2.5 billion annual investment and inquires about plans to increase the transfer percentage to SMEs.

Key requests to Government

Graham asks the Government to clarify whether the £2.5 billion invested annually is a gross or net figure, how much of the levy can be transferred to SMEs, and if there are plans to increase this transfer percentage to encourage more apprenticeships. He also requests that the Minister provide updates on transferring non-levy payers to a simpler system and address issues related to the inflexibility of the current framework.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Richard Graham Con Gloucester

Richard Graham is concerned about the effectiveness of the apprenticeship levy introduced three years ago. He notes that while the number of higher apprenticeships has doubled, there has been a significant drop in level 2 and level 3 apprenticeships. The complexity of the system, particularly for small and medium-sized enterprises (SMEs), has led to many employers seeing the levy as a tax rather than an investment opportunity. Graham highlights specific issues such as delays in approving standards and administrative burdens that discourage companies from using their unspent levy funds.

Other contributors (14)
  • Carol Monaghan SNP Glasgow North West

    Discussed the challenges of the apprenticeship levy for Scottish businesses and highlighted Scotland's progress in exceeding its apprenticeship targets. Emphasised the importance of recognising apprenticeships as an equal route to employment alongside higher education. Mentioned specific initiatives like the national retraining partnership and degree apprenticeships, noting a 93% positive destination rate for young people.

  • Damian Hinds Con East Hampshire

    Mr. Hinds discussed the apprenticeship levy within a broader context of measures introduced in 2015, including reductions in corporation tax and the introduction of the national living wage. He acknowledged that while there have been challenges with the speed of approving standards and flexibility issues, the overall impact has been positive with an increase in funding and quality of apprenticeships. Mr. Hinds emphasized the importance of addressing the free rider problem and suggested reviewing and reforming the levy to better support pre-apprenticeship programmes.

  • Daniel Poulter Con Central Suffolk and North Ipswich

    Daniel Poulter acknowledged the benefits of changes to the apprenticeship levy for SMEs but noted that the introduction of agricultural apprenticeships has sometimes been challenging, asking what advice could be given to address this.

  • Emma Hardy Lab Kingston upon Hull West and Haltemprice

    Summarised the debate, highlighting concerns about apprenticeships in Wales, regional differences, social mobility, and the drop in apprentice numbers since the levy was introduced. Noted that 509,000 apprentices started in 2015-16 but only 393,000 in 2018-19—a 23% decrease. Raised issues about overspending and funding rationing for smaller employers, leading to a 49% drop in SME apprenticeships.

  • Gerald Jones Lab Merthyr Tydfil and Aberdare

    Apprenticeships are a devolved issue in Wales. Welsh police forces have paid over £2 million annually into the apprenticeship levy, but they do not receive this money back from the UK Government. This is another example of the Government trying to shift responsibility and blame based on technicalities of reserved and devolved powers. I express concern about the Welsh police forces issue related to the apprenticeship levy scheme, which has been ongoing. If not addressed today, I request a response in the coming days.

  • Jim Shannon DUP Strangford

    Jim Shannon discussed the importance of apprenticeships, highlighting how they cover various aspects of life and provide opportunities for those who excel in practical skills. He mentioned a constituent's efforts to save her child's benefits to support her daughter's future career in trades or academia, suggesting that more investment is needed. Shannon pointed out a decline in the number of new apprenticeship starts since 2017 and called on the Minister to address why we cannot revert to the previous system. He also provided statistics about apprenticeships in Northern Ireland, including the high proportion of male participants.

  • Jo Gideon Lab Stoke-on-Trent Central

    I discussed the challenges faced by further and higher education providers, such as Staffordshire University in my constituency, which hosts 750 apprentices. The university is facing drawbacks due to the current system, with an estimated 300 potential apprenticeships lost because of non-levy allocation limitations. I called for improvements to be made to allow more applications per small and medium-sized employer (SME). Additionally, I stressed the importance of raising awareness among employers about how the digital application service works.

  • John Howell Con Henley

    I highlighted a new apprenticeship training centre in my constituency at the Culham science centre, which has been funded by the Government and is run as a partnership between various organisations. The centre offers high-quality engineering apprenticeships for individuals from diverse backgrounds. However, I expressed disappointment that the Social Mobility Commission warned of a two-tier system emerging due to the apprenticeship levy. Since its introduction, there has been a decrease in lower-level apprenticeship starts among deprived communities, with figures dropping from 21.9% in 2015-16 to 16.4% by 2018-19.

  • Kate Green

    Kate Green praised a degree apprentice from her constituency and noted difficulties for companies like Russell's Construction in deploying the levy through their supply chain to SMEs, suggesting that this might be something for the Government to consider.

  • Kevin Brennan Lab Cardiff West

    Kevin Brennan noted the expansion of apprenticeships before 2010 and highlighted that the current apprenticeship levy is too rigid, particularly affecting industries like film.

  • Liz Saville-Roberts PC Dwyfor Meirionnydd

    Liz Saville-Roberts raised issues regarding the reserved-devolved interface, specifically in policing where education and training are devolved but funding for apprenticeships is unclear. Does the hon. Gentleman agree with the report of the Commission on Justice in Wales, chaired by former Lord Chief Justice Thomas and commissioned by his Welsh Labour Government, that now is the time to demand that policing be fully devolved to Wales?

  • Paul Girvan DUP North Down

    Paul Girvan discussed the difficulty Northern Ireland faces where firms contribute to the apprenticeship levy but have no access to it due to the absence of an Executive, urging a level playing field and opportunities for comments on new schemes.

  • Robert Halfon Con Southend West

    Robert Halfon acknowledged the challenges with the apprenticeship levy, highlighting the importance of flexibility and opportunities for SMEs. He emphasized the need to publicize these opportunities among both large employers and smaller businesses. Discussed the importance of promoting apprenticeships' prestige, suggested a UCAS-type system for further education and apprenticeships, highlighted issues with gaming the levy system and called for reforms to ensure funds are used more productively. Mentioned the need to increase access to degree apprenticeships for disadvantaged students. Like the shadow Minister, I suggest that the Government is open to extending the apprenticeship levy rather than just reforming it. Additionally, I ask for figures on the budget for apprenticeships over the next few years.

  • Stephanie Peacock Lab Barnsley South

    Stephanie Peacock acknowledged the importance of apprenticeships and raised concerns that the apprenticeship levy does not benefit school leavers as intended but rather those seeking additional qualifications mid-career.

Government Response

Michelle Donelan

I congratulate my hon. Friend the Member for Gloucester on securing the debate, and I warmly welcome his ongoing interest and engagement with the Government's work on high-quality apprenticeships. It is vital that we advocate for businesses and apprentices alike up and down the country. Since 2010, there have been 11,000 more apprenticeships in Gloucester alone. National Apprenticeship Week celebrated everything apprenticeships offer employers, individuals, and society; however, frustrations remain about the complexities of the current system. The levy remains a concern for some employers, but we are keeping it under constant review to understand its impact on employers of all sizes and how it can deliver for our economy and social mobility. Less than 2% of employers pay the levy, but 56% of starts—almost 225,000—are supported by funds in employer accounts between 2018 and 2010, with more funding available than ever before: over £2.5 billion for investment this year. The apprenticeship service includes a digital service to support employers managing their funds and choosing training providers from a register of approved providers, making funding available for an additional 15,000 apprenticeships this financial year to support SMEs. We are confident our work will respond to the rigidity of the system and open more opportunities for individuals and businesses, while we continue to carefully monitor falls in apprenticeship starts at level 2 and by younger people as reforms bed in. Apprenticeship standards ensure rigorous training and assessment; all apprentices will start on high-quality standards by the start of the 2020-21 academic year.

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