BOND ADAMS EMPLOYMENT UPDATE by Dispute Resolution Partner, Rafique Patel
All large employers will be required to pay an apprenticeship levy, set at 0.5% of the employer’s paybill. The money gathered via this scheme will be distributed to fund the cost of apprenticeship training and assessment.
Other reforms to the rules applying to apprenticeships include that, to protect the term “apprenticeship”, training providers will be unable to describe a course as an apprenticeship where the course or training is not a statutory apprenticeship.
In addition, public-sector bodies in England with 250 or more employees will be subject to an apprenticeship target. Apprenticeship starts will need to comprise at least 2.3% of the total workforce each year.
The apprenticeship levy is expected to come into force on 6 April 2017, but there is no confirmed commencement date for the other measures.
Apprenticeship levy will go ahead next year, government confirms
the Scheme will start in April 2017, despite business groups’ call for a delay because of economic uncertainty
The UK government is sticking to plans for a levy on employers to help fund apprenticeships, ignoring business groups’ calls for the charge to be delayed because of the economic uncertainty sparked by the Brexit vote.
Some business lobbyists reacted with dismay at the confirmation on Friday that the levy on larger companies in England will be launched as planned in April 2017. They were already critical of the plan before the referendum result, claiming it was poorly designed and risked reducing rather than raising the quality of training.
Other groups, however, have welcomed the scheme as an important step in addressing skills shortages and a way of broadening young people’s routes into decent careers.
Theresa May has made tackling inequality a key theme of her new government, and this marks the second time in a week the prime minister has stood up to big business groups concerned about rising salary bills. On Monday, Downing Street dismissed pressure to slow the implementation of the “national living wage”.
Robert Halfon, the apprenticeships and skills minister, said the levy would help to ensure “people of all ages and backgrounds have a chance to get on in life”.
“Apprenticeships give young people, especially those from disadvantaged backgrounds, a ladder of opportunity. That’s why we continue to work tirelessly to deliver the skills our country needs. The apprenticeship levy is absolutely crucial to this,” he said.
The levy is designed to fund 3m places for apprentices. It will be paid by employers in England with a payroll of more than £3m and charged at a rate of 0.5% of their annual pay bill. When George Osborne unveiled the levy last year, the former chancellor said those paying it would “get out more than they put in”.
The government has also said employers that are too small to pay it – around 98% of those in England – will have 90% of the costs of training paid for by the state. Extra support, worth £2,000 per trainee, will also be available for employers and training providers who take on 16 to 18-year-old apprentices or young care leavers.
One body for the construction industry described the levy as a “fair settlement for small employers”. The Federation of Master Builders (FMB) said the only cure for the industry’s skills shortages was to recruit and train more people.
The FMB’s chief executive, Brian Berry, said: “Small and medium-sized firms do the majority of training in our industry. Micro businesses [those employing fewer than 10 people] alone train around half of all construction apprentices. It is therefore crucial that new apprenticeship funding arrangements work for these firms and do not impose higher costs on them.”
The CBI, which represents companies that employ nearly 7 million people, has criticized the levy and called on the government to push back the April 2017 start date.
Carolyn Fairbairn, the CBI’s director general, said: “We welcome the government’s focus on growing investment in apprenticeships, and business stands ready to step up and increase its own commitment. However, the apprenticeship levy in its current form risks turning the clock back on recent progress through poor design and rushed timescales.”
“The levy is too narrowly defined. It covers only one type of training and employers can only reclaim off-the-job costs. As a result, valuable forms of training risk being cut back, with quantity put ahead of quality.
”The trade group for the human resources sector, the Chartered Institute of Personnel and Development (CIPD), said the levy in its current form risked devaluing apprenticeships by putting the number of beneficiaries ahead of the quality of training they receive.
Ben Willmott, the CIPD’s head of public policy, said: “It is irresponsible for the government, particularly in a time of economic uncertainty in the aftermath of the referendum, to simply press ahead with a policy that is not fit for purpose.”
Employer groups have also said the levy could prompt some firms to rebadge existing jobs as apprenticeships to meet training targets and recoup the costs of the charge.
The British Retail Consortium also called for a delay. “The government should delay its introduction to 2018, allowing more time to design a truly viable system that delivers high-quality training,” said Helen Dickinson, its chief executive.
For advice on all aspects of employment law including representation in the employment tribunal, representation in the Employment Appeal Tribunal and the courts, contact our partner Rafique Patel on email@example.com