On the surface it is a simple proposition. From April 2017, UK employers with a wage bill of £3 million or more must give 0.5% of their pay roll directly to the government. This money will raise £3 billion by 2020, which the Treasury claims will lead to the creation of three million apprenticeships.
Additionally, the creation of an Institute for Apprenticeships will, Osborne claims, ensure the apprenticeships are of a high quality. And a new Digital Apprenticeship Service will be responsible for giving employers the chance to use money raised by the levy to deliver training.
But those that have studied the levy closely say the devil lurks in the detail.
“The changes that are being made now are going to turn SMEs off in droves,” says Richard Bridgman, chairman of Warren Training. “You couldn’t think up a more complicated system if you tried.”
The comments came at a debate on the impact of the Levy at last month’s EEF Manufacturing Conference. Panellist and EEF chief economist, Lee Hopley said the levy “lacked sophistication” and confessed the details of how it would be administered were unclear.
Bridgman commented: “You have to pay money in; you might get it back, you might not get it back. If the EEF’s chief economist can’t understand it, how is a small engineer supposed to understand it? I really do think the government needs to go back to the Skills Funding Agency, get round the table and start again with this.”
Manufacturers and other employers are particularly concerned about the level of financial support provided. The government has said that employers who are seen to be investing in training in growth will be granted top-ups sums, paid for from unused funds from others who do not use their allocated allowance. But we have no idea at what point those top-ups will be capped. So proactive employers who want to put provisions in place for future apprenticeships will remain in limbo.
Tom Thomas, head of employment and skills at the EEF, warned “there are several future challenges which must be overcome before manufacturers can support the new levy.”
He added: “Employers must be able to control the funding, with the lowest possible level of red-tape. Any level of funding available to employers must allow them to cover the real cost of providing a quality apprenticeship with predictable and stable funding over the long term.”
The government insists that if employers work with them, any kinks can be ironed out.
“For me one of the most important thing is that we set the caps for provision at the right level to fund high-quality apprenticeships,” says Susan Acland-Hood, HM Treasury director of enterprise and growth. “I really would encourage people to get engaged with those conversations on rates. That’s going to be a really important part of the process.”
Regional concerns are also high on people’s minds. Under current plans, each business will have an electronic ‘voucher account’ where they can monitor their contributions and access funds to put towards delivering their own apprenticeships.
But skills training in Scotland and Wales and Northern Ireland is devolved, meaning it won’t be possible to spend vouchers outside of England. So even though companies across the UK will have to pay in, as it stands only English employers will see a return. Roseanna Cunningham, Scottish cabinet secretary for fair work, skills and training, said the levy “encroaches on our devolved responsibilities and is causing concern for employers”.
The government has a lot of work on its hands to get industry on-board by April 2017. But however strongly-opposed, the levy is coming in. The message from Westminster is to engage and work out ways in which you can make it work for you. Whether industry listens will depend on the clarity of the message and quality of conversation on offer.
What your view: email hroberts@findlay.co.uk
The apprenticeship levy: at-a-glance
What is it: a tax of 0.5% on employer’s with a wage bill of more than £3m to fund the creation of new apprenticeships
When will it launch: April 2017
What are the shortfalls: confusion reigns over when employers will pay in, how they will get credits back and whether Scottish and Welsh businesses will be able to spend their training vouchers at all.
