The Apprenticeship Levy costs employers 0.5 % of payroll above £3 million, yet only 2.3 % of the £3.8 billion collected in 2024–25 was actually spent by small and medium-sized businesses. The rest disappeared into large-company training schemes or back to the Treasury as unspent funds.
Large employers can re-label existing graduate programmes as “Level 6/7 apprenticeships” and claim the cash. A small engineering firm wanting to train a 17-year-old machinist is told the only approved course is a two years long and costs £27,000 – when they only need six months on the shop floor.The 1832 Club is fighting for these changes. The more members we have, the louder our voice in Westminster.
The levy has become a stealth tax on growth. Firms that cross the £3 million payroll threshold suddenly face a £15,000–£50,000 annual bill with almost no realistic way to use the money on their own people need. Over 40 % of levy-paying smaller firms let their funds expire unused every year.
We demand a simple, fair reform:
- Allow levy funds to be spent on any accredited Level 2–5 training – not just narrow “apprenticeship standards”.
- Let SMEs pool unspent levy funds with other local businesses or transfer up to 50 % to supply-chain partners.
- Raise the levy payment threshold to £5 million payroll and reduce the rate to 0.3 % for firms under £15 million.
Total cost: £420 million a year – fully covered by closing the large-firm graduate-scheme loophole that currently swallows hundreds of millions annually.
Germany’s dual system works because small firms get direct, flexible funding. Britain’s system punishes them for growing.
Stop treating the levy as a Treasury cash cow. Make it work for the businesses that actually train Britain’s future engineers, plumbers, and coders.
The 1832 Club is fighting for these changes. The more members we have, the louder our voice in Westminster.
Join today from just £5/month or £40/year and help to support pro-SME candidates.
Together we can make a difference.