Disregarded business groups dismay, as the apprenticeship levy is pushed through

The Government is pushing ahead with its proposal to require large employers, to “invest in apprenticeships”. Many thought the levy plans, which were not popular with many business groups before Brexit, would be shelved following the referendum result based on economic uncertainty. However, the Department for Education’s publication of the proposals for apprenticeship funding  means that it is likely that final proposals will be confirmed in October and imposed in April 2017.
The levy is designed to fund three million places for apprentices, by charging qualifying employers (those operating in the UK with a pay bill over £3 million each year) 0.5 per cent of their annual pay bill. Once employers have declared the levy to HMRC they will be able to access some of funding through their account on a new digital apprenticeship service. The latest consultation documents put flesh on the bones of the proposed funding regime. In the documents, the apprenticeship frameworks and standards are divided into 15 funding bands ranging from £1,500 to £27,000. The consultation documents cover a few more practical areas which may affect large employers, including cross-border funding and directing funds in a digital training account to another employer. They also propose that employers “co-invest” with the Government where they have insufficient training funds in their digital accounts, or they are not subject to the levy.
The previous Chancellor said that those paying the levy would “get more out than they put in”. However, an employer caught by the levy, still cannot say that the apprenticeship model does not meet the needs of its business, or opt out of the levy altogether. Employers not looking to buy apprenticeship training are instead likely to rebadge existing roles as apprenticeships to mitigate their costs.
The CBI, CIPD and British Retail Consortium have been vocal about their concerns about the levy and their feelings that businesses are being ignored. They warn that narrowing training covered and enabling employers to only reclaim off-the-job costs could result in training being cut back and quantity being put ahead of quality. They call on the Government to delay implementation to give time for full consideration and ensure that the levy is fit for purpose.
Employers wishing to share their views will need to complete the Department of Education survey (https://beisgovuk.citizenspace.com/ve/apprenticeship-funding-proposals) by 5 September, 2016.

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Michelle Lamb

About Michelle Lamb

Michelle is a senior associate in the Employment team. She advises public and private employers on all aspects of contentious and non-contentious employment law, but specializes in TUPE, change programs, employment aspects of corporate transactions and discrimination complaints. Michelle regularly procures advice from other jurisdictions to support Dentons' multinational client base.

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