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Runaway training: Why the apprenticeship levy is broken and how to fix it

The apprenticeship levy began operating in April 2017. The levy is, in effect, a tax of 0.5 per cent on the pay bill of UK employers with annual wages of over 3 million pounds. These employers pay their levy contributions into a digital account held by [Her Majesty’s Revenue and Customs] HMRC and can then ‘spend’ their contributions on apprenticeships delivered by registered training providers. Other employers who do not pay the levy can access the funds that the levy generates through arranging apprenticeships with registered providers as well. In its first full year of operation, the levy raised 2.7 billion pounds and this is expected to rise to 3.4 billion pounds by 2023-24. However, there have been repeated warnings in recent months that the funding pot generated by the levy is about to run out. This report investigates what is happening with the apprenticeship levy and with the apprenticeship system in England more broadly.