The business sector is divided over the introduction of levy to help fund apprenticeships.
The UK government is sticking to plans for a levy on employers to help fund apprenticeships, ignoring business groups’ calls for the charge to be delayed because of the economic uncertainty sparked by the Brexit vote.
Some business lobbyists reacted with dismay at the confirmation on Friday that the levy on larger companies in England will be launched as planned in April 2017. They were already critical of the plan before the referendum result, claiming it was poorly designed and risked reducing rather than raising the quality of training.
Other groups, however, have welcomed the scheme as an important step in addressing skills shortages and a way of broadening young people’s routes into decent careers.
Theresa May has made tackling inequality a key theme of her new government, and this marks the second time in a week the prime minister has stood up to big business groups concerned about rising salary bills. On Monday, Downing Street dismissed pressure to slow the implementation of the “national living wage”.
Robert Halfon, the apprenticeships and skills minister, said the levy would help to ensure “people of all ages and backgrounds have a chance to get on in life”.
“Apprenticeships give young people, especially those from disadvantaged backgrounds, a ladder of opportunity. That’s why we continue to work tirelessly to deliver the skills our country needs. The apprenticeship levy is absolutely crucial to this,” he said.
The levy is designed to fund 3m places for apprentices. It will be paid by employers in England with a payroll of more than £3m and charged at a rate of 0.5% of their annual pay bill. When George Osborne unveiled the levy last year, the former chancellor said those paying it would “get out more than they put in”.
The government has also said employers that are too small to pay it – around 98% of those in England – will have 90% of the costs of training paid for by the state. Extra support, worth £2,000 per trainee, will also be available for employers and training providers who take on 16 to 18-year-old apprentices or young care leavers.
One body for the construction industry described the levy as a “fair settlement for small employers”. The Federation of Master Builders (FMB) said the only cure for the industry’s skills shortages was to recruit and train more people.
The FMB’s chief executive, Brian Berry, said: “Small and medium-sized firms do the majority of training in our industry. Micro businesses [those employing fewer than 10 people] alone train around half of all construction apprentices. It is therefore crucial that new apprenticeship funding arrangements work for these firms and do not impose higher costs on them.”
The CBI, which represents companies that employ nearly 7 million people, has criticsed the levy and called on the government to push back the April 2017 start date.
Carolyn Fairbairn, the CBI’s director general, 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.”
“The levy is too narrowly defined. It covers only one type of training and employers can only reclaim off-the-job costs. As a result, valuable forms of training risk being cut back, with quantity put ahead of quality.”
The trade group for the human resources sector, the Chartered Institute of Personnel and Development (CIPD), said the levy in its current form risked devaluing apprenticeships by putting the number of beneficiaries ahead of the quality of training they receive.
Ben Willmott, the CIPD’s head of public policy, said: “It is irresponsible for the government, particularly in a time of economic uncertainty in the aftermath of the referendum, to simply press ahead with a policy that is not fit for purpose.”
Employer groups have also said the levy could prompt some firms to rebadge existing jobs as apprenticeships to meet training targets and recoup the costs of the charge.
The British Retail Consortium also called for a delay. “The government should delay its introduction to 2018, allowing more time to design a truly viable system that delivers high-quality training,” said Helen Dickinson,its chief executive.
The British Chambers of Commerce welcomed the support for those taking on 16 to 18-year-old apprentices, but also urged the government to focus on quality. The manufacturers’ organisation EEF welcomed plans to increase funding for apprenticeships in science, technology, engineering and mathematics, but it too said questions remained over the levy’s design and it pushed for a later start date.
The Institute for Public Policy Research (IPPR), however, said the government was right to launch the levy in April.
“Following Brexit, British employers may not be able to rely on recruiting migrant workers to fill skills gaps, so we’ll need more apprenticeships to train up our domestic workforce,” said Jonathan Clifton, IPPR’s associate director for public services.
The beauty of doing this is that you can give your existing staff NVQ training and qualifications and thus ensuring they have the right skills and training in place.
In order to turn your existing staff into apprentices for FREE then the staff must be aged between 16-18 as the government fully funds this age group. If the staff members are aged 19-24 years old then the funding is cut and there may be a small contribution to pay. In some cases it may be free, but it depends on the training provider and how much funding they have available.
To give you an example, if a 23 year old admin assistant was enrolled onto an apprenticeship, they would gain a Level 2 or Level 3 NVQ in Business Administration in 12 months. This would cost around £150 + VAT as this cost would contribute to the shortfall in the cut in funding.
The amount of money you would have to contribute depends on the qualification as funding varies between industries.
As apprenticeship specialists we would scour the market to get you the best prices possible and try to keep the training free where possible.
Business Administration is a distance learning qualification so you would not lose your staff member to regular College attendance, instead an assessor would visit the workplace every 8 weeks. This varies depending on industry and the amount of staff you place into apprenticeships. For example, Digital Marketing or IT Support would require College attendance 1 day per week, but if there were a number of apprentices in the same workplace, it may be viable for a college to deliver the training on site. We would assess on a case by case basis.
You may get a £1,500 apprenticeship grant if:
- You have less than 50 employees
- Your apprentice is aged 16 to 24
- You can claim support for up to 5 apprentices.
We can help turn existing staff into apprentices if:
- Aged 16-18 for fully funded training
- Aged 19-24 for part funded training
- Aged 24+ you will have to pay a larger fee unless we can source a provider with 24+ funding
- You can commit to providing support and on the job training
- Are willing for the staff to attend college as necessary
- Apprentices work at least 30 hours per week
- You have a genuine desire to up-skill your workforce
- Keep apprentices on current salary (We won’t work with employers who want to use apprentices as an excuse to provide lower wages)
- The staff have at least Grades A – E in Maths and English