Commons Sense

House of Commons · Westminster Hall

Apprenticeship Levy — [Dr Rupa Huq in the Chair]

22 November 2023 · 6 other contributors · 13,468 words

Opened by Jonathan Gullis Con Stoke-on-Trent North

Responding minister: Robert Halfon

EmploymentBusiness & Trade

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

Read the full transcript on Parliament.uk

At a glance

Jonathan Gullis raised concerns about apprenticeship levy — [dr rupa huq in the chair] in Westminster Hall. A government minister responded.

Key points

  • Concerns about decline in apprenticeship starts since 2017 are raised, from half a million to just over a quarter of a million in 2022-23.
  • SMEs face difficulties accessing apprenticeship levy funding due to bureaucratic processes.
  • Government urged to reform levy for SME accessibility and increase flexibility for shorter courses.

Key requests to Government

I urge the Government to reform the apprenticeship levy to make it more accessible for SMEs and to increase the flexibility of the levy to support shorter courses that meet specific labour market demands. This includes raising the current transfer from 25% to 35%, supporting off-the-job training with £2,500 per apprentice under 25 years old, and exploring ways to use unspent levy funding to back SMEs.

How the debate unfolded

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

Opened the debate

Jonathan Gullis Con Stoke-on-Trent North

I am concerned about the decline in apprenticeship starts since the introduction of the apprenticeship levy in 2017. The number of new apprenticeship starts has fallen from half a million in 2016-17 to just over a quarter of a million in 2022-23, with significant reductions for different age groups: 41% for 16 to 18-year-olds, 31% for 19 to 24-year-olds, and 26% for those aged over 25. Additionally, small and medium-sized enterprises (SMEs) find it difficult to access the levy funding due to bureaucratic processes.

Other contributors (6)
  • David Linden SNP Glasgow East

    As a former apprentice, David Linden highlighted the importance of apprenticeships in ensuring that young people are prepared for practical roles rather than academic ones. He noted that Scotland has taken a more flexible approach to using the levy funds compared to England, resulting in higher numbers of apprentices being trained. However, he mentioned that Scottish businesses still face challenges due to the rigidity of UK Government's definitions of apprenticeships and lose significant sums to the Treasury when unable to spend their entire levy pot. Asked the Minister to write to him about why auto-enrolment does not apply at age 16, suggesting it could help with retention of young people in apprenticeships.

  • Jim Shannon DUP Strangford

    Jim Shannon highlighted the importance of apprenticeships in providing opportunities for young people who do not wish to go to university. He cited an example from his constituency where a mechanic started as an apprentice at £3.67 per hour and progressed to becoming a fully qualified technician. Shannon stressed that apprenticeships are crucial for various sectors, including agriculture, noting the importance of apprenticeship funding in Northern Ireland. He called on the Minister to encourage progress in providing opportunities within rural communities.

  • Peter Aldous Con

    Mr Aldous highlighted the importance of a functioning labour market for economic growth and noted the apprenticeship levy's aim to provide long-term funding. He pointed out a decline in apprenticeships, with only 60,000 young people starting each year and the loss of 160,000 engineering and manufacturing training places. He suggested reforms such as extending the expiration period for funds, providing more flexible minimum duration requirements, and increasing the apprenticeship wage to improve retention.

  • Seema Malhotra Lab Co-op Feltham and Heston

    Malhotra highlighted the importance of apprenticeships for social justice, career progression, and business growth. She noted a decline in intermediate apprenticeship starts by 69% since the levy's introduction and criticised businesses surrendering £3 billion to the Treasury due to unused funds. Malhotra also emphasised that only 4% of employers spend their full levy funding, with SMEs being particularly affected, showing a 35% decrease in apprentice starts. Responded to the discussion on flexibility, citing a quote from the CEO of the Learning and Work Institute regarding the need for nuanced analysis of policies.

  • Therese Coffey Con Suffolk Coastal

    Commends the apprenticeship levy for providing a pathway to high-skilled jobs, but notes lack of flexibility and surplus funds going back to Treasury. Highlights issues like drop-out rates, need for intermediate apprenticeships, and agriculture funding challenges.

  • Tim Farron Lib Dem Westmorland and Lonsdale

    Last year, more than £3 billion of the levy was not spent. Many businesses in his community find it difficult to access apprenticeship opportunities despite wanting to take on apprentices. He suggested redirecting some of the underspend to encourage small businesses to participate. We have a succession issue with farmers, less than 60% of food consumed in the UK is grown domestically, and need to attract young people into farming through enhanced apprenticeships.

Government Response

Robert Halfon

Responded to points raised by Members, highlighted the increase in apprenticeship starts from 2021 to 2022, emphasised the focus on quality rather than quantity, discussed career starter apprenticeships and bootcamps. He mentioned spending £98% of the apprenticeship budget given by Treasury, giving hundreds of millions under Barnett consequentials, introduced not only nursing but also doctor apprenticeships, spent over £3 billion on apprenticeships by 2025, gave £1,000 to every provider and business employing an apprentice, and reduced regulation for small businesses when starting to employ apprentices.

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