23 May, 2022

The Apprenticeship Levy has arrived

13 April, 2017

The Apprenticeship Levy, a levy on UK employers to fund new apprenticeships first announced at the Chancellor’s Autumn Statement in November 2015, has now been introduced. In England, control of apprenticeship funding is now put in the hands of employers through the Digital Apprenticeship Service. The Levy is charged at a rate of 0.5% of an employer’s paybill. Each employer will receive an allowance of £15,000 to offset against their Levy payment. The Levy will affect employers in all sectors, but will only be paid on annual paybills in excess of £3 million, and so less than 2% of UK employers will pay it.

The UK Government has said that the Levy’s objective is to boost productivity by investing in human capital. As part of this, the Government states it is committed to developing vocational skills, and to increasing the quantity and quality of apprenticeships. It has committed to an additional 3 million apprenticeship starts in England by 2020. The Levy aims to help to deliver new apprenticeships and to support quality training by putting employers at the centre of the system. The Government comments that employers who are committed to training will be able to get back more than they put in by training sufficient numbers of apprentices.

The Apprenticeship Levy may be a game changer, but it has its challenges, according to Bally Bhogal, managing director of new Birmingham-based advisory firm Independent Training and Skills Services (ITSS). She said one of the biggest challenges is the lack of knowledge and understanding around apprenticeships and the subsequent handover of control to a training provider. “Being in the driving seat is key to ensuring that employers get a good deal,” she remarked, adding that the Apprenticeship marketplace has over 1500 registered training companies, so “doing your homework” can really pay off to avoid getting ripped off.

With companies paying £3 billion a year, the CBI has cautioned that significant concerns still exist about whether the policy will deliver the high-quality training businesses and apprentices need. With the Government having worked quickly to get the Apprenticeship Levy in place for the launch, which took place on 6 April, its focus so far has been on building an operational system that works. Now the policy has been introduced, the CBI is repeating its call for the Government to broaden its focus, prioritising quality and long-term success measures alongside growing apprentice numbers.

Neil Carberry, CBI director for people and skills policy, said for the Levy to be a success it must deliver long-lasting careers and close skills gaps, not just create more apprenticeships. The CBI has identified a number of recommendations for the Government, which it maintains would help employers access quality training with confidence. These recommendations include:

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