Scotland will receive substantially less money than predicted from the new apprenticeship levy, the UK Treasury has confirmed, as debate rages around how the funding should be spent.

Scotland will receive £221 million from the new levy next year, with the amount due to rise to £239 million by 2019-2020, despite predictions that the fund would be worth around £300 million a year.

The Treasury’s announcement prompted Colleges Scotland to say that FE institutions were in the best position to ensure that the cash reached the frontline of apprenticeships.

‘We’re the frontline’

Every UK employer with a payroll of more than £3 million will have to pay into the levy. In England, employers will be able to directly invest their levy contribution on apprenticeship schemes. But employers in Scotland will have to rely on the Scottish government investing their portion of the money into apprenticeships and training.

Shona Struthers, chief executive of Colleges Scotland, told TESS this week: “The college sector is central to the delivery of apprenticeships in Scotland.

“The apprenticeship levy provides an opportunity to structure the delivery mechanism to deliver the high-end skilled apprenticeships that are sought-after and valued by employers.”

She added that Scotland’s large regional colleges could ensure that “as much funding as possible is directed at frontline delivery of apprenticeships for the benefit of apprentices, businesses and the economy”. Speaking at Holyrood last month, first minister Nicola Sturgeon insisted that the levy would be used for training and skills but did not make any specific promises.

“The Scottish government has carried out and recently concluded a consultation specifically on how we use the apprenticeship levy funds. We will come forward with the detail of that when we publish the Budget in a few weeks’ time,” she said.

But both employer organisations and student representatives said that the money from the levy needed to be ring-fenced.

The NUS has repeatedly called on the government to ensure that the money is spent on eliminating the factors that prevent people from starting apprenticeships.

Rob Henthorn, NUS Scotland vice-president for education, said the levy presented a great opportunity to make vocational routes a more viable option for more people.

It would be “a missed opportunity” if the levy was simply used to promote one kind of programme over another, he said.

He added: “Instead, it should be used to improve the quality of the apprenticeships already on offer, and address the underlying inequalities and barriers that continue to exist within vocational education.”

Business demands

Hugh Aitken, director of CBI Scotland, said that business should have a direct say in how the funds were spent.

“The CBI has asked for much of this money to be used to set up a flexible skills fund, giving businesses direct access to training funds for in-work training and apprenticeships that are appropriate for their business,” he said.

Employability and training minister Jamie Hepburn said that it would be up to ministers to decide how the money would be spent.

“Funding for apprenticeships and wider skills will be set out as part of the overall Scottish Budget in due course,” he added.

Mr Hepburn said he would continue to meet with industry representatives and the Scottish Apprenticeship Advisory Board to discuss the outcome of the consultation on the levy.

@jbelgutay