Chancellor George Osborne’s apprenticeship levy, which will be in place from 2017, has been designed to help fund employer apprenticeship schemes across the country and to “invest in Britain’s future”.
From April of next year, the levy will be set at a rate of 0.5 per cent of an employer’s payroll bill, with the aim of delivering 3 million apprenticeships by 2020. In reality, the government is putting aside £15,000 for every business into a reserve from which it can fund apprenticeships. Businesses only have to contribute to that if they have a payroll bill of more than £3 million per year. So, if you have, say, a £4 million bill, you’ll pay 0.5 per cent on that fourth million, so an extra £5,000.
In relation to what businesses would be getting back from an apprentice, that is negligible. For companies that don’t have a payroll bill of £3 million, the government will still have £15,000 earmarked for their business. This fund can only be accessed by implementing training, which is going to get companies to start thinking about apprenticeships very seriously.
For those employers that have to pay the levy, it will be done through PAYE. But it is vital to remember that fewer than 2 per cent of employers will be affected by the levy.
Employers will be able to access an online system to say that, yes, they would like to access their apprenticeship fund, and also that they want, say, MiddletonMurray (the firm that I run) to provide their training.
From my point of view it’s a win-win situation, because it’s not only going to incentivise more businesses to become involved with the apprenticeships scheme, it will also make companies more commercially selective of whom they use to source their apprenticeships.
The goal should always be to drive value to the end user (ie, the employer in search of an apprentice and, ultimately, the apprentice) and this needs to remain in the front of everyone’s mind.
For us as training providers, the levy clearly represents a more efficient way to approach a business, as it will enable us to inform companies that there is an amount deposited for them which has been earmarked for apprenticeships, and we can show them how to tap into it.
There has been some criticism of the fact that under the levy, employers will be required to pay 0.5 per cent. But I firmly believe that, looking at the bigger picture, this amount of money is insignificant.
If you have a payroll bill of £3 million-plus, you’re a sizeable organisation; £5,000 isn’t going to break the bank. The benefits that businesses will enjoy will far outweigh this spend, and I don’t envisage this as being a problem for most businesses. Initially, the worry was that smaller businesses would not be able to afford another 0.5 per cent on their payroll bill, but the scheme has protected them.
The levy’s main benefit is that it’s undoubtedly going to get more businesses interested in creating opportunities that will upskill the workforce of the UK – crucial if we are to remain a leading force in the face of stiff competition globally.
I believe that this new system can yield extremely positive results, both for businesses and for the young people of the UK. As a leading provider, I’m only too happy to work within the system and I believe that businesses should strive to do the same. No one can disagree with the intentions behind the levy.
Yes, there might be some disagreements regarding the way in which the scheme is implemented, but we need to look at the system and establish how best to work within it to garner the best results.
Angela Middleton is chief executive and founder of MiddletonMurray and author of How to Get Your First Job…And Build the Career You Want. Stephen Exley is away