From unused millions to workforce impact: Strategic use of apprenticeship levy transfers is essential

Kathryn Oliver, Head of Human resources at Health Innovation East argues that a major national training opportunity is being significantly underutilised.

When approached strategically – particularly via levy transfers – apprenticeships are one of the most powerful tools available to support not only the development of the national workforce, but also social mobility, the provision of essential public services and economic resilience.

Left underutilised, levy funds do not have a neutral impact. Rather, they contribute to the under development of a potentially beneficial national training strategy (particularly for the health and care workforce).

From April 2026 apprenticeship levy funds not used with a 12-month expiry period (previously 24-months) are claimed back by the exchequer, significantly increasing the likelihood that they will be utilised in a manner that does not add further value to the apprenticeship system.

Research suggests that businesses are increasingly aware of their wider societal impact. Growing shareholder and stakeholder expectations have encouraged firms to integrate corporate social responsibility and societal issues into their core strategies – whether environmental, philanthropic or ethical (2)(3). Applying such principles to the apprenticeship levy and it’s societal  benefits it seems reasonable to assert that organisations should make best possible strategic use of apprenticeship levy funds, such that in the long term they contribute the further development of a nationally skilled workforce and its concomitant benefits.

Every pound unused is capability lost

More than £3.3 billion in unused apprenticeship levy funding was returned to the UK Treasury between 2019 and 2022 (4). When levy funds lapse, they are unlikely reappear elsewhere in the skills system, leading to the potential for reduced investment in workforce capability, lost training places and unrealised productivity and careers.

Skills England and the Department for Education reported in 2024 that one-third of all vacancies (36% in 2022 and 27% in 2024) were a result of skills shortages (5)(6). Given this bracing statistic it appears myopic for companies contributing significant levy funds not to a) use them to invest in heightening internal capability – a future talent pipeline or to b) make funds available to key partners, and SMEs (particularly health and care) which are in a position to benefit.

Turn surplus into a national strength

Apprenticeship levy transfers allow employers to pass up to 25% of the value of their annual levy funds to other organisations. From April 2026, the planning window for apprenticeships will be 12 months. Previously permitting a 24-month window, the upcoming legislation restricts even further the time available to companies to take decisions on the value of funds that can be utilised in house and what can be released to other organisations towards their training needs.

For levy-paying employers who cannot realistically utilise all their funds, levy transfers are a reliable way to mitigate against potential waste. Whilst in individual cases such waste may be viewed inconsequential and localised, when amalgamated regionally, it is easy to interpret unused funds as a significant national training opportunity that is not being optimised.

Yet, there remains potential to translate a national deficit into a national strength. For larger employers, transferring unused levy funds strategically provides them with an opportunity to contribute to a distributed skills economy which can be leveraged regionally – making a real long-term difference.

In this scenario large organisations become catalysts, helping fund training opportunities and enabling smaller employers and essential public services to build capability. Expiring funds can be converted directly to jobs, qualifications and long-term economic benefit for all. Here, the most forward thinking organisations have an opportunity to act in stewardship of training that makes a strategic difference regionally and nationally.

There are benefits to all involved in the Apprenticeships process;

Prioritise strengthening health and care

Few areas illustrate the potential impact of levy transfers more clearly than health and care.

An ageing population and a rising number of chronic illnesses, means health and care systems are becoming increasingly stretched (10)(11). The healthcare landscape consists of many organisations – some huge in scope and others with niche focus – all working to improve the nation’s health. We each benefits from the development of a sector that demonstrates such a wide and profound impact.

Many smaller health and care organisations, despite the importance of their work, do not have sufficient apprenticeship levy funds of their own to develop the skills they need to undertake crucial work in optimal ways. If a greater percentage of unused levy funding were transferred to health and care organisations it could make a significant impact for the long term on the care that we each receive. When apprenticeship transfers are deployed strategically the benefits can flow towards frontline care.

Optimise impact: Health Innovation East

The apprenticeship levy is not just a funding mechanism. It is an opportunity to commit to a national investment in people. Yet, such investments only deliver returns when used. If your company is the steward of an apprenticeship levy fund and is not currently utilising its fullest extent, please contact hr@healthinnovationeast.co.uk.

We are keen to discuss partnerships which would enable us to build the skills and capability of our staff – improving long-term health in the East of England and beyond. Health Innovation East is a partner organisation to the NHS, our purpose is to help the best innovations in health and care reach the people, places and problems where they bring most benefit.

NB: * The levy is a tax on employers with a pay bill over £3 million per year, collected monthly via PAYE, and functions as a mandatory expense for large businesses. Business can’t directly influence what happens to their contribution and many pay more in than they are able to take out e.g. Organisation X pay a large levy but are limited in the number of apprenticeship roles they can create in their workforce.