Funding for apprenticeships unveiled – but question marks remain over the new levy system

It’s fact: employers will need to pay the apprenticeship levy if they have a pay bill of more than £3m each year from April 2017. And according to business leaders, the announcement couldn’t come at a better time.

“The Brexit uncertainty and the delay in updates was becoming disconcerting, but now we know it’s definitely going ahead, both employers and apprenticeship providers can plan accordingly,” said Kelly Ball, MD of Positive Outcomes.

“Apprenticeships are a wonderful way of nurturing young and enthusiastic talent. We regard them as a key component of bridging the UK skills gap. We hope that more and more employers will recognise this. With the levy now set to take place we’re hoping to see firms offering young adults a rich tapestry of career paths to choose from.”

But most importantly, Ball explained, is that the latest update on funding for apprenticeships suggests the government could cover 90 per cent of the costs for small businesses – which should apply to 98 per cent of companies. Firms with an annual wage bill under £3m, however, will not have to contribute to the levy.

Furthermore, companies which take on younger apprentices will benefit from a cash incentive of £1,000 per apprentice, employers will be able to use levy funds to retrain workers in new skills, even if they have prior qualifications, and a new register of training providers will be introduced in 2017.

However, the levy system, which has drawn sceptical responses since its announcement in 2015, does not sit will with those who called for the delay of its implementation due to the Brexit vote.

For example, Ben Willmott, head of public policy at the CIPD, claimed the concerns regarding the levy in its current form are wide scale and that it is irresponsible for the government to “simply press ahead with a policy that is not fit for purpose”.

“Our research suggests the levy, in its present form, will undermine efforts to improve the quality of apprenticeships.” Wilmott said. “This is a time where we need to be raising the status of apprenticeships, not pursuing a policy which will have the effect of devaluing the ‘apprenticeship brand’. In addition, there is the damaging unintended consequences of forcing employers to reduce investment in other areas of equally valuable workforce training and development, and to essentially ‘re-badge’ existing training as apprenticeships in many instances.

“This ‘one-size-fits-all’ approach will damage attempts to improve the UK’s workplace productivity and will not address the downward trend in employer investment in training in recent years.”

Here are five ways British businesses can get future-proofing apprenticeships.

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