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Apprenticeship levy and the new Green Paper

Will the new apprenticeship levy revolutionise Britain’s future workforce?

Ben Lambert, head of business apprenticeships at BPP Professional Apprenticeships, and Emma O’Dell, head of strategic partnerships at BPP Professional Apprenticeships, discuss how the apprenticeship levy may revolutionise Britain’s future workforce.

I Ben Lambert Emma O’Dell

n his Autumn Statement, Chancellor George Osbourne announced that from April 2017 all large businesses

will have to pay a levy to help fund apprenticeships across the UK. The move comes as the government tries to boost the quality of apprenticeship training, and hit its pledge to create three million new apprenticeship positions by 2020.

Businesses with an annual pay bill of over £3 million will have to pay 0.5 per cent of their wage bill to the government, regardless of whether they employ apprentices or not. These payments will be ring-fenced to generate funding for apprenticeship training. From this, all firms, no matter what their size, will be able to claim an allowance of £15,000 to be put towards paying for apprenticeship training from a recognised provider.

Some firms may be concerned about the financial implications that the levy will have for their business, but those who pay in and are committed to creating a high quality training scheme within their company will benefit, and will be able to claim back more than they contribute. Another issue that firms are currently facing is that they do not know the full details of the levy, and, with the final Finance Bill not being published until spring, many are concerned about how they can create a strategy in time. It is therefore vital that companies reach out into the businesses community for

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support and speak to a trusted business advisor or training professional for help creating an apprenticeship scheme suited to your business needs.

Why is the levy being introduced? The government’s agenda is to both introduce more rigorous apprenticeship standards (the Trailblazer Initiative) and increase apprenticeship starts to three million by 2020. This is a 30% rise on the previous five years. As Alison Wolf, advisor to the government, pointed out “in an environment of static budgets, the sums just do not add up and employers must accept that they too must make a larger contribution”. The apprenticeship levy is, she argues, the logical solution to funding the increase, and the Chancellor, as confirmed in his Autumn Statement, agrees.

A recent report by Ofsted stated that the government’s ambition to boost the number of apprenticeships is commendable, with the potential to raise the profile of apprenticeships as an answer to the productivity puzzle that is currently affecting the UK. However, the report also highlighted that, although apprenticeship numbers have grown, the government has not focused enough on implementing initiatives that benefit employers or the economy.

Reforms are underway to combat these criticisms and encourage firms to take on more apprentices. For example, firms will


who pay in and are committed to creating a high quality training scheme within their company will benefit, and will be able to claim back more than they contribute.

no longer have to pay National Insurance contributions for apprentices under the age of 25 from April 2016 and the term ‘apprenticeship’ is now legally protected in the same way as a ‘degree’. In December, the government published ‘English Apprenticeships: Our 2020 vision’ which revealed that, to ensure that young school and college leavers can access all chosen career paths, the public sector will be required to boost the number of apprentices within its workforce and, by law, will need to hire more than 200,000 apprentices over the next five years.

It also stated a new independent body will be established to help regulate the quality of training as it drives to create more apprenticeships of the highest standard. This will comprise of experienced employers, business leaders and their representatives, as they look to ensure that apprenticeships will provide people with the transferable skills needed to help the UK thrive.

How will the businesses be able to capitalise on the levy? The levy is another way that the government is trying to put businesses at the heart of its apprenticeship vision, increasing the funding available to firms in order to better the standard of apprenticeship training currently available.

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