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Is the Apprenticeship Levy diminishing the learn-as-you-earn industry?

Rio Brookes-Gibbs

02 January 2018

The Apprenticeship Levy came into force on 6 April 2017 with the aim of creating three million new apprenticeships by 2020. But instead of increasing numbers, it seems that apprenticeship employment has dropped since the introduction of the Levy. Is this a case of businesses simply internalising the training process, or is the Levy proving to be a deterrent?

The Government hoped to raise £2.5 billion a year for training, by charging a Levy to organisations with a wage bill of over £3 million. Whilst most firms are not large enough to be liable for the Levy, the Government estimated it would only affect 2% of businesses, both large and medium sized firms (employing between 50 and 200 staff) were faced with new responsibilities. These new responsibilities include releasing apprentices for one day a week for off-site training and contributing to some of the costs.

It may well be that these responsibilities lie behind the 59% decline in apprenticeships. According to latest figures released by the Department for Education, only 48,000 people actually began an apprenticeship between May and July 2017, less than half the 117,000 who did so in the same period last year.

There has also been speculation that employers are actually spending their time formulating new internal training schemes that work better for their organisation, as opposed to adhering to Government Levy regimes. For example, a Levy-paying employer has 24 months to spend the funds earmarked for apprenticeships. But by internalising the process, this time period and allocated spend could be more flexible.

It is also fair to say that the scheme has faced some heavy criticism from many industry experts – and this could also be a factor in the decline of apprenticeships. Many experts believe the scheme has been badly organised and implemented. Verity Davidge, Head of Education and Skills Policy at the manufacturers’ organisation, the EEF, said that it is “frankly unsurprising as we continue to hear stories from companies who have hit a brick wall in trying to get Levy-supported apprenticeships off the ground.”

It seems that employers have found it difficult to interpret the complex rules around how the Levy may be used, and accessing the funding has proven complex. If this is the case, then we believe that as employers become more familiar with the process, everything will settle down and perhaps more opportunities for apprenticeships will come in. It will be interesting to see if any proposals are made to help simplify and encourage greater application.

If you would like further information about the Apprenticeship Levy and how it could benefit your organisation, contact Wilkins Kennedy to see how we can help.

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