Apprenticeships Levy commences for English employers

An Apprenticeship levy starts this week, a government funding program to create a kitty for vocational training in England.

Apprenticeships provision is based on devolved systems in the UK nations.

The levy covers all firms based in England with a PAYE bill above £3 million pay 0.5 per cent of their total bill into the government apprenticeship levy fund from this week.

The company can then claim ten percent over that amount back in training vouchers for its apprentice staff.

But some companies and ministers have already criticised the scheme as ‘a blunt tool’. The levy must be paid by all firms through PAYE regardless of whether they use training vouchers.

A report from the government’s cross-party sub-committee on Education, Skills and the Economy derided the levy, recommending: “The government, as part of its continuing review of the operation of the levy, consider whether a single rate is the best approach and explore ways of restructuring the levy on a sectoral and regional basis.”

The Confederation of British Industry has also raised concerns, it said: “The levy risks making apprentices more expensive as well as penalising those already providing quality schemes which is why many struggle to see how the policy could increase and improve training and provision. The central flaw is that it does not reflect the very best of employer behaviour. 

“As currently envisaged, it seems a business can only draw down levy funds for training by an external provider - the ‘off-the-job’ element of an apprenticeship.”

The apprenticeship system could also provide means for unscrupulous bosses to relabel jobs as apprenticeships to claim funding for entry-level staff.

Robert Halfon, Minister for Skills, said: “We are truly working together with business to invest in home-grown skills and ensuring people of all ages and all backgrounds get their foot on the ladder of opportunity.

As the Apprenticeship Levy formally starts, the Department of Education has also opened the Institute of Apprenticeships, an independent agency to coordinate training provision. Its new Chair, Antony Jenkins, said: “The institute is now formally up and running. As an employer-led organisation we will be well informed and responsive to the evolving skills that they need to succeed and that our apprentices need to fulfil their potential.”

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