28 October 2016
The government has announced the full details of the Apprenticeship Levy, which is due to be launched next April.
Businesses have been made aware for some time now that the Levy is being introduced, but this is the first time the finer points of it have been confirmed.
The Levy will be introduced from 6 April 2017, and is aimed at increasing the number of apprentices that UK employers take on each year.
The Levy is set at 0.5 per cent of a businesses’ pay role, but only employers whose salary bill adds up to more than £3 million will pay the Levy - this is only a small percentage of British businesses.
However, all businesses need to understand the Government’s apprenticeship reforms, because it includes funding initiatives which employers can take advantage of if they take on new apprentices, particularly those from disadvantaged backgrounds.
This funding includes a 90 per cent contribution towards apprenticeship training costs for non-Levy payers, and 100 per cent funding for smaller businesses of the training costs of 16 to 18 year olds, or 19 to 24 year olds from disadvantaged backgrounds.
For the latter, an additional payment of £1,000 will be made to employers and training providers for each apprentice, and there will be other funding available for those apprentices who come from deprived areas.
Greater funding will also be made available for STEM (Science, Technology, Engineering and Mathematics) apprenticeships.
Levy-paying employers will eventually be able to pass on their contribution to firms in their supply chain who take on apprentices, and details of this will be worked out in consultation with a group of employer’s organisations, including British Chambers of Commerce.
Birmingham Chamber is fully backing the new proposals, but says a lot remains to be done to educate employers about the system.
Chamber policy adviser Elliot Mason (pictured) said: “Importantly, Chamber research indicates that Government still has a great deal of work to do in communicating details of their reforms to employers.
"Our recent Workforce Survey highlighted that 37 per cent of West Midlands businesses hadn’t heard about, or had no understanding of, the Apprenticeship Levy and that only 11 per cent of respondents felt that the Government’s apprenticeship reforms would have a positive impact upon their firm’s recruitment of apprentices.
"This is highly concerning given the time remaining until implementation and the reform’s scale and importance. Success will be directly linked to the level of engagement from UK businesses and Government needs to do much more to inform employers of how they will be affected and the opportunities that will be available to them.
“It is good to see that the Government is listening to employers and the further education sector in taking steps to soften the impacts of their apprenticeship reform proposals. We also welcome increased support for training providers and employers that work with young apprentices and those from disadvantaged backgrounds.
“This is vital considering Robert Halfon’s promise that these reforms will ensure that everyone in the UK has the opportunity to benefit from an apprenticeship. Nevertheless, it remains to be seen whether these good intentions can translate into positive change for apprenticeships.
“For our part, the GBCC will be working closely with our members and key stakeholders in the coming months to share critical information about the apprenticeship reforms and provide guidance on how employers of all shapes and sizes can make the most of the changes. Keep an eye on our events calendar and daily e-news for further information.”