Government’s apprenticeship levy questioned

The government’s apprenticeship levy will not be enough to ease the skills crisis, according to one of the heads of the UK’s specialist training companies.

The apprenticeship levy will come into force from April 2017 at a rate of 0.5% of an employer’s pay roll. The levy will only be payable by larger companies with a wage bill of £3M, with these employers receiving an allowance of £15,000 against the levy.

Chris Wood, Chief Executive of Development Training has described the proposed business levy as “ill conceived”.

For a large business with a wage bill of £800M, the annual levy would total £4M. Therefore, to realise a financial return, that firm would likely need to recruit 200 to 300 apprentices per year.

Mr Wood said: “Although only big companies with a wage bill of £3M or more will be affected I can see difficulties in recovering those costs in practice. Most large firms would need to take on hundreds of apprentices with perhaps few prepared for this in the near-term, not least because of the dearth of suitable candidates. Rather than being perceived as a training panacea the levy risks being seen simply as another short-term tax on large businesses.

“When it comes to investing in training and skills there seems only ever to be two courses of action: tax-and-spend or borrow-and-spend. Not only do these approaches involve generally unpalatable sources of funding but importantly both call for direct government action. In essence they involve the abdication of corporate responsibility.

“Instead of simply taxing businesses, the government should look to encourage British business owners to invest directly in the people who will ultimately operate and manage their companies. The government could help in this respect through supportive tax-breaks or other incentives but, frankly, it should also be driven by commercial common sense.”

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