Apprentices: Taxation

Department for Education written question – answered on 31st July 2020.

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Photo of Karin Smyth Karin Smyth Shadow Minister (Northern Ireland)

To ask the Secretary of State for Education, what discussions he has had with the Chancellor of the Exchequer on the of unspent levy funds.

Photo of Gillian Keegan Gillian Keegan The Parliamentary Under-Secretary of State for Education

The government is committed to improving the working of the apprenticeship system and the apprenticeship levy. Ministers and officials meet regularly with HM Treasury to discuss all matters relating to apprenticeships, including how to best support employers to develop apprenticeship programmes and spend their available funds. We also continue to work closely with businesses and to listen to their views about the operation of the levy and the apprenticeships program more broadly, taking into account the impact of COVID-19.

We recognise that employers, at the moment, face increased challenges with hiring new apprentices. To encourage employers of all sizes to take on apprentices, and to support large employers to spend their levy funds, we will introduce a new payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1 August 2020 to 31 January 2021. We will also ensure that there is sufficient funding to support small businesses wanting to take on an apprentice this year.

Employers’ levy funds are not the same as the department’s ring-fenced apprenticeship budget, which is set to fund apprenticeships in England only. This budget is used to fund training for new apprenticeship starts in levy and non-levy paying employers and to cover the ongoing costs of apprentices already in training. It is also used to cover the cost of end-point assessment and any additional payments made to employers and providers. We do not anticipate that all employers who pay the levy will need or want to use all the funds in their accounts, however they are able to. This means that levy payers’ unspent funds are not lost but are used to support apprenticeships in smaller employers and additional payments. We have also increased the number of reservations that SMEs can now make through the apprenticeship service, from 3 to 10, enabling them to recruit more apprentices.

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