Apprenticeship levy a good idea? – Proposals unveiled

The Department for Education has released details of the proposed apprenticeship levy, but could it cause further skills shortage?

Following the governments new proposals for the apprenticeship levy, contractors have warned that it could lead to firms paying thousands of pounds extra to train apprentices in the construction industry.

The Civil Engineering Contractors Association said it now had “very strong concerns” about the affordability of the new training levy, expressing worries that the changes could “jeopardise the industry’s ability to deliver new skills in the future”.

The new proposals will see a levy charged to employers with a pay bill of over £3M a year, at a rate of 0.5%, in addition to the CITB training levy. Those in this criteria that want to spend more on training than is in their “digital account” will receive 90% of their additional apprenticeship training costs.

Smaller businesses that are below the threshold will have 90% of the costs of training paid by the government.

In total, there will be 15 bands that make up the apprenticeship funding system, each with an upper limit ranging from £1,500 to £27,000. The upper limit of each funding band will cap the maximum amount of funding that a levy-paying employer can use towards and individual apprenticeship, or that a non-levy paying employer will be able to access from the government.

According to the latest consultation, additional support of £2,000 per trainee, will be available for businesses taking on apprentices between the age of 16-18 and young care leavers.

Any businesses with less than 50 employees will receive full funding for the training of apprentices.

Director of Policy at CITB, Steve Radley, said: “This announcement brings mixed news for construction, but it’s good that Government has responded to what we said on the challenges faced by smaller firms.

“There is still work to do to make sure ensure funding bands reflect the actual costs of training, so that apprenticeships are affordable for companies of all sizes. We will seek further clarification from Government on how the bands have been set, and together with industry, set out the likely impact on construction firms and their ability to take on apprentices.”

CBI director-general Carolyn Fairbairn said: “The Government’s announcement provides business with much needed information which shows some progress, including support for smaller firms, but fundamental problems remain. The Levy is too narrowly defined. It covers only one type of training and employers can only reclaim off-the-job costs. As a result, valuable forms of training risk being cut back, with quantity put ahead of quality.”

The consultation closes on 5 September, and the government intends to confirm the final funding proposals in October.

The start date of the new regime is April 2017, however many have urged the government to delay the implementation to give them more time to prepare.

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