In April 2017 the way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers.
The broad principle is that large employers with a pay bill in excess of £3m will be required to pay what is being called a levy.
The levy will be charged at a rate of 0.5% of the employers annual pay bill. Firms will receive an allowance of £15,000 to offset against this levy payment.
In return, employers will be provided with electronic vouchers that can be used to access training funding for their own apprentices. As is already the case, employers will also have to pay the wages of apprenticeships.
Typically a business will ‘buy’ this training from a college or recognised independent training provider. No money will pass hands; the voucher system will trigger a payment to the training provider.
Any unspent levy money (funding that a company has contributed via the levy but can’t spend on training their own apprentices) will be distributed more widely.
WILL IT WORK?
From our perspective there are many unanswered questions.
It is possible that some very large employers will develop their own apprenticeship training and, if so, there are questions about how this training will be regulated.
If small businesses benefit from being able to buy the training with unspent vouchers from bigger organisations they will still need to find the wage costs.
There is a huge danger that larger companies will not use their levy because they can’t take enough apprentices in any one year, and the money will be redirected to other sectors that are more apprenticeship friendly. If so, an inadvertent effect of the levy would be that it becomes a tax on companies that don’t take apprentices, or can’t take enough in any one year to reclaim the training funds.
HOW WE CAN HELP
We can assist you to optimise the levy, whether you are a net contributor or a net beneficiary. And of course we’ll keep you up-to-date on progress of this new Government initiative and how this will affect you.
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