DEPENDING on your point of view, it might be another tax on business – or a major opportunity to upskill the UK workforce.
From Thursday, all employers could be affected by the introduction of the apprenticeship levy.
It will only be collected from employers with a £3million payroll – or around two per cent of businesses and organisations. But the way in which apprenticeships are administered and funded will change for everybody.
The levy was announced by then-chancellor George Osborne in the autumn of 2015, as a way of raising money for the government’s plans to create three million apprenticeships by 2020.
“If you’re an employer with a payroll over £3m, you will have to pay some apprenticeship levy, 0.5 per cent, on everything over £3m,” says Matt Butcher, sales and customer account manager with Bournemouth and Poole College.
A £15,000 allowance will be subtracted from that bill each year.
The levy will be collected monthly and banked in a digital account, which the government will top up by 10 per cent. The employer can draw the money down monthly to pay for training.
“It applies to every business or organisation, charities as well. What it effectively means is that the money you pay via the levy, you can use as a company to pay for the cost of training apprentices,” Mr Butcher added.
While levy payers will use their accounts to pay the full cost of apprenticeships, small and medium sized enterprises (SMEs) will pay only 10 per cent.
There is also an exception intended to make it more attractive to hire young workers. The government will fully fund apprenticeships for 16 to 18-year-olds taken on by employers with fewer than 50 staff.
The budgets must be spent with registered providers of apprenticeships.
Mr Butcher acknowledged some employers were wary that apprenticeships might mean extra red tape, but said: “We’re trying to deliver a service that takes as much of that out as possible.”
He added: “There’s someone on the end of the phone or email who can answer if you’ve got a query about how much you pay them or how many hours you can work. We have a team of people whose job is to make it easier for people to take on an apprentice.”
Many people’s conception of apprenticeships is still about younger recruits learning traditional trades. But while that is still a part of the picture, those promoting apprenticeships are keen to emphasise there is much more to them.
Theresa Moore, director of apprenticeships with the college, says apprenticeships can cover fields such as digital marketing, cyber security and electronic engineering. And they need not be about new recruits.
“Somebody in your workforce could become the apprentice. You could upskill them,” she said.
“If you have a member of staff who wants to upskill to a management level, you can do that through your workforce.”
The levy has come in for some criticism. A committee of MPs said it was a “blunt tool”, which could not respond to the differing needs of individual employers and their sectors.
But Mr Butcher said apprentices boost productivity by around £214 a week. “Most businesses that have apprenticeships at the moment rave about them and come back year after year for more,” he said.
Theresa Moore added: “We’re constantly talking about the fact that we have a skills shortage in the UK.
“I believe it’s going to become quite critical with Brexit coming along. We have to muster some momentum into starting investing in our young people.”