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The Apprenticeship Levy has had mixed views from when it was first announced. While some applauded the government for trying to improve apprentice uptake rates, others have been concerned about costs and the confusion around the new system put in place. 

The Apprenticeship Levy was introduced in April 2017 as a way to fund and increase the amount of apprenticeship places offered. The Levy is to be paid by companies with a staff wage bill of more than £3 million. Many businesses feared this would increase their costs. However, it’s thought to only apply to 2% of employers, larger companies rather than typical businesses.

The Levy is currently at 0.5% of a company’s payroll. However, all businesses do get an allowance of £15,000 which they can offset against the amount they owe.

The Levy is expected to raise £3 billion a year. This fund allows businesses to access an online digital apprenticeship service account which can be used to pay for apprenticeship training and assessment.

Although the Apprenticeship Levy is paid for by larger companies, smaller businesses can still access the digital apprenticeship service and benefit from the funding.

No boost for apprenticeships

According to new figures released, the Apprenticeship Levy has yet to actually increase the number of people being trained.

There were 114,000 apprenticeships started in the first quarter of the 2017-2018 academic year so far. This is compared to 155,600 for the same period in the previous year, showing that there’s actually been a drop of 27%, not just a slowdown.

Complaints about the system

Some of the common complaints call the levy another tax and others say that the system is too hard to navigate which stops businesses from taking on new apprentices.

Employers’ groups have said that the government is failing to act on concerns about changes to the apprenticeship system and the costs that businesses are now expected to bear.

The Department for Education has said that the levy has likely affected the amount of apprenticeships being started in the last year and their overall drop.

The Institute of Directors (IoD) say that many employers are still struggling to understand how the system works.

Seamus Nevin, IoD’s head of policy research said that these “figures are a warning for the government, as it becomes increasingly unlikely that they will meet their three million new starters target. The levy is the right idea, but the system is ripe for reform.”

 

What do you think of the Apprenticeship Levy? Do businesses need time to adjust or does the system need reforming? Let us know your thoughts in the comments.

About The Author

Kara Copple

An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.

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