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UK-wide apprenticeship levy will benefit only English firms, reveals skills minister Nick Boles

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Business leaders have hit out at revelations that although companies across the UK will have to pay the new apprenticeship levy, only the apprenticeship programme in England will benefit from the money generated.

The levy was announced in the Budget earlier this month and will help to fund the government target of 3 million apprenticeship starts in England by 2020. The Budget document says the approach, which will apply only to large employers, will “reverse the long-term trend of employer under-investment in training”.

In a response to a written Parliamentary question, skills minister Nick Boles said the levy would be UK-wide, but would be used only to “support post-16 apprenticeships in England”. This raises the prospect of money from firms in Scotland, Wales and Northern Ireland being invested in apprenticeships in England while they receive no direct benefit.

A spokesman for the CBI told TES the levy should be used to boost apprenticeship provision “in every part of the UK”. The business lobbying organisation added that although the levy would increase funding for apprenticeships, it “guarantees neither quality nor relevance”.  

“If the levy is to be nationwide, then the funding raised must be put in the hands of employers and used to support high-quality apprenticeships in every part of the UK,” the spokesman added.

David Watt, executive director at the Institute of Directors Scotland, said: “If this is a UK-wide levy, the benefit should also be UK-wide.”

A spokesman for the Department for Business, Innovation and Skills said the spending on apprenticeships in England would “flow through the Barnett formula in the usual way”. He added that devolved areas would continue to have “complete flexibility over how to support businesses through training and apprenticeships”, being able to mirror England’s arrangements if they wished.

The Barnett formula is a mechanism used by the Treasury to adjust public expenditure allocated to Scotland, Wales and Northern Ireland, to reflect differences in public spending between the devolved regions and England. As a result, the Scottish, Welsh and Northern Irish governments could expect to receive additional funding as a result of the levy, but the cash would not necessarily end up being passed back to the businesses in the three countries that are forced to pay the levy.

A spokeswoman for the Scottish government said it was studying the detail of the Budget announcement, and called for “much more clarity and detail on what is intended and the potential impacts on Scottish employers and apprentices”.

A spokesman for the Welsh government, meanwhile, said it would “work with the UK government regarding proposals that may impact on Welsh employers and the Welsh economy”. 

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