Industry calls for delay to Apprenticeship Levy

In a letter written to the government, organisations that co-signed said introducing the levy now would impact already stretched charity, business and public sector budgets.

“Given the economic uncertainty caused by the vote to leave the EU, I believe it is imperative that the Government delay its introduction and look again at how it will work,” said Peter Cheese, chief executive officer of The Chartered Institute of Personnel and Development, who co-signed the letter.

If the Government pushes ahead with its current timetable for the apprenticeship levy we could see a decline in both the quality and quantity of apprenticeships

EEF chief executive Terry Scuoler

The Apprenticeship Levy was first introduced by former Chancellor George Osborne in his 2015 Summer Budget. It is designed to encourage larger firms to take on more apprentices and help bridge the skills gap.

Money generated from the levy, which is expected to be in the region of £3 billion, will be used to fund the government’s five-year apprenticeship scheme.

In Osborne’s 2015 Spending Review/Autumn Statement, he announced that the levy would stand at 0.5% of a company’s payroll and would affect businesses with a wage bill of £3 million and over.

As part of the levy, employers would receive a £15,000 allowance against the levy and those with a wage bill of less than £2 million would be exempt from the levy and will pay zero tax on it.

However, there is concern over how the levy will be managed and how the funding will be controlled.

There is also currently no guidance, and the organisations that co-signed the letter have warned that without the levy guidance, which was due out in June, employers are unable to plan for its introduction, which increases levels of uncertainty.

Terry Scuoler, chief executive of manufacturers’ organisation EEF, said: “Our industry is passionate about high quality apprenticeships and we want to see more of them. However, if the Government pushes ahead with its current timetable for the apprenticeship levy we could see a decline in both the quality and quantity of apprenticeships.”

He added that industry partners have come up with solutions to some of the major sticking points of the apprenticeship levy, but stressed these require more time.

“A delay to implementation is vital if we are to successfully get this policy back on track, avoid hitting business with additional costs at a highly uncertain time and ensure that the apprenticeship levy fits in fully with a wider industrial strategy,” Scuoler said.

Steve Elliott, chief executive of the Chemical Industry Association, said industry wants more apprenticeships, suggesting the levy could be part of the solution.

However, he said a delay would allow time for a “confused mechanism” to become part of an effective solution.