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Apprenticeship Levy “not working”

by Philomena Price | Dec 20, 2017 |
Local Housing Initiative

On 6 April 2017, the Apprenticeship Levy came into force. It has now come under criticism since it has emerged there has been a drop in new apprenticeships.

Background

The Apprenticeship Levy was introduced by the UK government in order to fund new apprenticeships. The government said that it was committed to developing skills and increasing the quality of apprenticeships and was committed to an additional 3 million apprenticeships in England by 2020.

How does it work?

Employers with an annual paybill in excess of £3million are required to pay the levy. The UK government estimates that the levy affects only 2% of employers. The levy is charged at a rate of 0.5% of an employer’s paybill, although employers can offset £15,000 as a tax allowance against the levy payment.

Why is it not working?

The Department of Education has released figures showing that there was a 59% drop on new apprenticeship starters year-on-year between May and July 2017.

It has been reported that employers are finding it extremely difficult trying to get levy-supported apprenticeships off the ground and that they haven’t been able to take apprentices on as they cannot get the support in time.

The Department of Education has said “it may take time for organisations to adjust to the new funding system, and so it is too early to draw conclusions based on the number of apprenticeship starts recorded since May 2017.”

So what next…

All lights indicate that the Apprenticeship Levy is not working. At the moment, it is difficult to see how the government’s target of 3 million apprenticeships in England will be reached. The government has said that Free Movement of EU citizens into the United Kingdom will end when Britain leaves the EU, meaning that we will not be able to rely on a continuous influx of skilled workers to drive the UK economy forward. It can therefore be argued that the success of the Apprenticeship Levy is even more so important to the UK; we will need to fill skilled jobs from somewhere after all.

The Education Committee has announced that it will be launching an inquiry into the quality of apprenticeships and skills training and that it will be considering whether employers, learners and tax payers are getting value for time and money invested into training. It will be interesting to see whether the inquiry makes any finding or suggestions concerning the Apprenticeship Levy, but for now, employers, apprenticeships and the government live in hope that the next set of figures published show an increase in new starts.

Get in touch

If you need any further advice, please do get in contact. Call Philomena Price, ​Director and Employment Law Solicitor at Spratt Endicott Solicitors on 01295 204147, or email pprice@se-law.co.uk.

*Disclaimer: While everything has been done to ensure the accuracy of the contents of this article, it is a general guide only. It is not comprehensive and does not constitute legal advice. Specific legal advice should be sought in relation to the particular facts of a given situation.

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