Apprenticeship Levy – ‘use it or lose it’ call to big business

PUBLISHED: 06:00 20 February 2019

The concept of 'earn while you learn' has proved attractive to many young people  Pictures: Getty Images/iStockphoto

The concept of 'earn while you learn' has proved attractive to many young people Pictures: Getty Images/iStockphoto


The government has pledged to help employers to build a skilled workforce fit to “compete on the world stage”, and the Apprenticeship Levy was established just under two years ago to achieve change. However, not everyone is making the most of the opportunity…

In a bid to hit its declared target of training three million new apprentices by 2020, the government introduced the Apprenticeship Levy in 2016.

How does the Apprenticeship Levy work?

Effectively a tax on big business, the levy, which came into effect in April 2017, requires a spend of 0.5pc of the company payroll by firms paying more than £3m a year in salaries – fewer than 2pc of UK employers.

Does the government pay for apprenticeships?

The government slightly eased the burden by introducing a levy allowance of £15,000 a year, to be subtracted from the 0.5pc total.

Also, as well as the amount paid into the account, the government applies a 10pc top-up on funds, so that for every £1 paid in, the employer gets £1.10 to spend.

The purpose of the levy is to encourage employers to invest in apprenticeship programmes and develop their workforces.

Is there an Apprenticeship Levy deadline?

The catch is that businesses have been allowed 24 months to spend their funds before they expire.

And it is estimated that of the projected £2.7bn levy pot across all industries, just £370m (13.7pc) has been drawn down to fund courses, according to Department for Education (DfE) data.

Next month will mark 24 months since the levy was introduced, and under government rules any unspent levy from March 2017 will be lost on a rolling monthly programme, decreasing the funds in the employer’s levy pot.

This means that businesses need to act now or lose out.

Margaret Burnside, director of CAKE People Development, says: “In April, the businesses which are paying the levy, but who haven’t spent it, will start to lose it and the funds will be gradually returned to the Treasury.

“We are here to support those organisations, to help them understand that the levy is a platform to engage with staff across all levels of the business to help them develop in their roles.

What are the benefits of employing apprentices?

“Meanwhile, apprenticeships, whether in leadership and management or learning and development, offer opportunities for structured, professional learning, leading to recognised qualifications.”

How can apprentices help business?

Undoubtedly, however, the region has skills problems.

According to recruitment specialist Cooper Lomaz, business growth in East Anglia is being held back by a lack of skilled staff.

The company’s latest annual East Anglia Salary Survey and Recruitment Trends report, which questioned 2,740 employees, found that 41pc believe their teams are understaffed, an increase of 8pc on 2017.

“As a nation, with unemployment at its lowest level for over 40 years, the demand for highly skilled candidates has never been higher,” the report says.

“The skills shortage is forcing employers to not only pay even more for the best talent, it’s also making them look at their entire non-financial offering and hiring process, to ensure they can retain and attract the very best people.”

Where can I find out more about apprenticeships?

At the same time, the Apprenticeships Norfolk Network, supported by Norfolk County Council, has been set up to help increase the number, level, range and quality of apprenticeships, while aiming for an additional 5,000 apprenticeships across Norfolk and Suffolk by 2019.

Network members include training providers, schools, employers and other organisations that all work in partnership to make sure they provide excellent help and support around apprenticeships.

The concept of “earn while you learn” has proved attractive to many young people, faced with the possible alternative of an expensive academic education at university.

However, the introduction of the apprenticeship levy was clearly aimed at adding impetus to uptake across industry.

A range of options is available to employers seeking to make the most of the levy before April, with many different types of apprenticeships available across a wide variety of industry sectors.

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