The government has announced further details about apprenticeships and the impact on employers

young employees

Approximately 98% of employers in England will have a large sum of costs associated with the apprenticeship levy met by the government. This is according to proposals published today by the government.

According to ONS statistics, 98% of all business have a wage bill of less £3m and the government has confirmed that these firms will only pay 10% of an apprentice’s training costs. In addition to this, they are also offering companies smaller than 50 employees the option to not make any financial contribution towards the cost of the levy. The levy that is set to come in to force next April is expected to see UK employers with an annual pay bill of more than £3m charged at 0.5% of their payroll expenses to fund 3m new apprenticeships. 

CBI Director-General, Carolyn Fairbairn, said: “We welcome the Government’s focus on growing investment in apprenticeships, and business stands ready to step up and increase its own commitment. However, 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. This really matters because of the crucial importance of closing the skills gap to improving the UK’s lagging productivity. The Government must take time to get this right, and listen properly to the concerns and ideas of the businesses who will be doing their best to make it work.  

“The April 2017 start date will not give firms sufficient time to prepare, so we urge the Government to delay implementation. Though business understands the fiscal challenges, it would be a great mistake to rush ahead before a viable scheme is ready.  We urge the new Secretary of State to take a step back from the political timetable and consider what is best for building the skills of our young people, to enable the UK to become a high-skilled, high-productivity economy.”

However, it has been confirmed that those employers paying the levy will still receive an annual proposed 10% allowance to offset against the levy cost. A new online calculator has also been launched to allow employers to work out how much apprenticeships will cost.

Kelly Ball, managing director of apprenticeship provider Positive Outcomes, on the other hand, is optimistic about the change. “Today’s announcement from the Government that the apprenticeship levy is set to go ahead as planned in April 2017 is a welcome relief. The Brexit uncertainty and the delay in updates was becoming disconcerting, but now we know it’s definitely going ahead, both employers and apprenticeship providers can plan accordingly.

“Apprenticeships are a wonderful way of nurturing young and enthusiastic talent. We regard them as a key component of bridging the UK skills gap. We hope that more and more employers will recognise this. With the levy covering much of the cost of training young apprentices, we’re hoping to see an increasingly diverse portfolio of apprenticeships on offer, offering young adults a rich tapestry of career paths to choose from.

“The update suggests the Government will cover 90% of the costs of an apprenticeship, and with firms with an annual wage bill under £3m not having to contribute to the levy, means this should apply to 98% of businesses. With such a level of support, employers should be enthusiastically taking up the opportunity to bring in malleable, energetic employees, who are eager to advance on the career ladder.”