One in three businesses unaware of apprenticeship levy
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Over a third of businesses have not heard of the apprenticeship levy due to be introduced next year.
Research by the British Chambers of Commerce (BCC) in association with Middlesex University says there needs to be more government communication about the apprenticeship funding reform.
Although the levy, which applies to companies with a payroll of more than £3 million, will come into force in April 2017, 39% of respondents to the BCC's survey said they had no understanding of, or had not heard about, the forthcoming requirements, while half (51%) did not understand how the funding reforms work above or below the £3m pay bill threshold.
The apprenticeship levy, first announced at Summer Budget 2015, will be charged at a rate of 0.5% of an employer's pay bill. Employers can then access the funds created through the levy using an online account and so invest in apprenticeship training. However, the levy cannot be used to pay apprentices' wages - it must be spent by the employer on relevant training.
According to the government, any unspent levy money that a company has contributed but doesn't spend on training their own apprentices will be distributed more widely, filtering down to smaller organisations to fund training for their apprentices.
Nearly 30% of those polled reported that they will fall under the scope of the levy, but only a quarter (26%) expect to recover all or more of their levy payment, suggesting that for many businesses, it will feel like a tax.
The Government aims to create around three million new apprenticeships by 2020, and funding raised by the levy will be available to employers of any size.
The levy is expected to raise up to £3 billion a year by 2019-20, and, of this, the Government estimates that £2.5 billion will be spent in England, with the remaining £500 million allocated to Scotland, Wales and Northern Ireland.
However, only 11% said the reforms will increase their recruitment of apprentices, while just 5% of businesses said they will have a positive impact on their wider training budget.
Marcus Mason, head of education and skills at the BCC, said: ‘The government needs to ensure that businesses understand how they could benefit from the reforms, because if it just feels like yet another tax then then the policy will have failed. Devolved administrations also need to provide a guarantee that the money raised is ring-fenced and kept for training.
‘The government should allow businesses to use the levy funding to support other high-quality workplace training or there is a risk of displacing other valid forms of training. Fundamentally, treating apprenticeships as a numbers game would benefit neither businesses nor apprentices themselves.'
