Apprenticeship levy needs 'radical rethink'

The apprenticeship levy, paid by large employers to fund an expansion of apprenticeships, needs a ‘radical rethink’, the CBI will warn today.

Director-General Carolyn Fairbairn will tell business representatives that there are increasing concerns about the ‘viability’ of the current system.

Plans to force employers to pay 0.5% of their payroll to fund apprenticeship places ‘encourages firms to rebadge their existing programmes’ rather than go to the expense of creating new ones.

 ‘It is crucial firms get closer to doing what the Government promised - being able to get your money back if you have a good programme’, she will add.

Employers will be eligible for the levy if they have a pay bill of more than £3 million each year. They can then access apprenticeship funding through a digital account. Each employer will receive £15,000 to offset the cost of implementing the scheme

Many nursery chains with more than a handful of nurseries will qualify for the levy. Those with charitable status will also not be exempt.

London Early Years Foundation, a social enterprise which has 60 apprentices, has previously said the apprentice levy will hit its growth plans.

The levy has been created to encourage employers to take apprentices after a goal was set to create three million new apprenticeships by 2020, though Ms Fairbairn will point out that ‘What’s being counted is three million started apprenticeships, not three million qualified apprentices. There’s a big difference.’

All settings too small to be eligible for the levy will be hit by plans for mandatory cash contributions if they want to hire apprentices – an upfront contribution to a training provider which will then be reimbursed.

Precise details of how much the government would give for every £1 contributed by the employer under this scheme had not yet been released.

A spokesman for the Association of Employment and Learning Providers said, ‘We have been saying right from the word go that if you talk about upfront contributions that is going to put SMEs off – [in early years this is] particularly small settings where we know there are often cash flow issues.’

More detail of how the levy, which comes in in April 2017, will work, was published last Thursday.



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