Labour has pledged to reform the apprenticeship levy into a ‘growth and skills’ levy in a bid to encourage firms to improve their employees’ skills.
Sir Keir Starmer’s party said today that ending restrictions on the apprenticeship levy would help British businesses grow.
Under current rules, firms with an annual wage bill of above £3m must give 0.5 per cent of their total payroll to HMRC, which they can then claim back to spend on funding apprenticeships.
But funds from the levy can only be spent on apprenticeship training and assessment with a training provider, with levy money unspent by businesses reclaimed by the Treasury.
Labour research found that more than half a billion earmarked for new apprenticeships has gone unspent in the previous two years.
The party wants to rewrite the rules to give firms more of a say and more flexibility in a bid to address the 4.6 per cent drop in apprenticeship starts, falling from almost 289,000 in 2021/22 to around 276,000 in 2022/23.
Labour said it would give firms freedom to use up to half their total levy contributions on non-apprenticeship training, with 50 per cent reserved for apprentices.
Shadow education secretary Bridget Phillipson said: “This is firm evidence that despite the Conservatives’ rhetoric on skills, their apprenticeships levy isn’t giving businesses the flexibility they’re crying out for.
“We can only make, do and sell more in Britain and get our economy growing if we invest in building the skills of our young people.”
She added: “That’s why Labour has a plan to give businesses back control over training their workforces through our growth and skills levy, with the flexibility they need to train young people in the skills our companies need to flourish and deliver the growth we need.”
The Department for Education (DfE) has been contacted for comment.