Government apprenticeship levy

Richard Furlong - City Surveys Group

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Published: 23rd August 2016

This Article was Written by: Richard Furlong - City Surveys Group


The government has called for opinions on the introduction of the apprenticeship levy in Spring 2017, but may not be delighted with the tone of responses from the Chartered Institute of Personnel and Development (CIPD), the Federation of Small Businesses (FSB) and the Confederation of British Industry (CBI), all of whom have criticised the current plans and called for a delay to the start of the scheme.

Under the current plans, from Spring 2017 all employers with a payroll of more than £3 million will be required to pay into the apprenticeship levy, but can in turn benefit by taking on apprentices.

The levy begins on April 6th 2017, with apprenticeship funding becoming available from May 1st 2017 for organisations that pay into the levy, and also for those that do not.

Employers must pay 0.5% of their total pay bill into the levy, with an allowance of £15,000 exempting those whose bill is below £3 million, and contributions collected via the Pay As You Earn process by HM Revenue & Customs.

Payments will be administered on a monthly basis, with any unused allowance carried over, and any excess payments from previous months refunded in the form of credits towards other PAYE liabilities.

Where an industry already operates its own apprenticeship levy or similar funding scheme, the new levy will simply be applied on top – leaving those sectors to come up with their own solution to stop employers from having to contribute twice to two different schemes.

The CIPD and other organisations have not reacted positively to the terms of the levy, arguing that it is a missed opportunity to rethink the system, or even to delay its introduction until more agreeable terms could be set.

CIPD CEO Peter Cheese said: “If we are to have an apprenticeship levy at all then we will need to make it far more flexible, otherwise we risk undermining the quality of apprenticeships further.

“The CIPD has already called for a delay in the introduction of the levy because we are concerned that rushing it through will have damaging, unintended consequences.”

The FSB and CBI both criticised the scheme too, with CBI Director General Carolyn Fairbairn saying: “The apprenticeship levy in its current form risks turning the clock back on recent progress through poor design and rushed timescales. Without a radical rethink it could damage, not raise, training quality.”

However, Apprenticeships and Skills Minister Robert Halfon stressed the importance of supporting businesses in the delivery of training for young people.

“Our businesses can only grow and compete on the world stage if they have the right people, with the right skills,” he said. “The apprenticeship levy will help create millions of opportunities for individuals and employers.”

Part of the government’s plans to address the concerns about the quality of training provided to apprentices includes the creation of a register of training providers and employers wishing to offer apprenticeships.

In order to join this register, apprenticeship training providers may apply from October 2016, some six months before the apprenticeship levy scheme begins.

The register should be up and running in time for the launch of the levy in April, and training providers will be sorted into 15 ‘bands’ on the list.

Employers wishing to take on apprentices may then negotiate prices with training providers from this list, with the different bands aligning with different types of apprenticeship.

Not all organisations have been negative about the latest government plans for the scheme, however; Catherine Sermon, Employment Director for Business in the Community, urged employers to get behind the new scheme.

She said: “The apprenticeship levy creates an opportunity for businesses to take a more active role in developing skills through vocational learning, which is a good thing.

“We now need to work together with businesses and government to help mitigate against negative unintended consequences that may arise as a result.”

Does your business employ apprenticeships within the construction sector? What are your thoughts on the apprenticeship levy? Why not get in touch… we’d love to hear from you.

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