Call to make small schools exempt from apprenticeship levy

Coming into force in April, the Apprenticeship Levy, announced by the former chancellor George Osborne in 2015, will fund an expansion of apprenticeships.

Under the levy, which will apply to all businesses including schools with a wage bill of over £3 million a year, employers will have to pay 0.5 per cent of their payroll.

Schools that employ their own staff, for example an academy or faith school, will be exempt from the levy if their wage bill is under the £3 million threshold.

However, the LGA says that where a school is maintained and its staff are technically employed by the local authority, those staff contribute to the overall wage bill of the council – rather than being counted separately, and consequently will have to pay the levy. This means the tax will have to be accounted for in school budgets from April 2017.

The LGA argues that it is ‘discriminatory’ for small council-maintained schools not to be exempt from the apprenticeship levy in the same way that small academies and faith schools will be. As such, it is calling for all schools with a wage bill of less than £3 million a year to be exempt from the tax.

Councillor Richard Watts, chair of the Local Government Association’s Children and Young People Board, said, ‘Small council-maintained schools will be forced to find additional money to pay the levy, whilst an academy or faith school with an identical wage bill can invest that money in making sure their pupils get an excellent education.

‘It is no secret that many schools are struggling with their funding, yet once again, council-maintained schools are being dealt a poor hand compared to academies. Clearly what really matters is making sure that all children get the education they deserve, regardless of school structures, so applying initiatives like the Levy equally across all schools is only right. The Government therefore needs to urgently revise the apprenticeship levy to make sure that all schools are on an equal footing.’

The CBI, along with nursery group LEYF, have expressed concern about the new Apprenticeship Levy.

Last year, the chief executive of LEYF June O’Sullivan warned that the levy, as well as the introduction of the 30 hours of free childcare, could stall the group’s growth.

Apprenticeship and Skills Minister Robert Halfon said, 'The apprenticeship levy will boost our economic productivity, while increasing the country’s skills base and giving millions a step on the ladder of opportunity.

'In the majority of cases, local authorities will be responsible for paying the levy in the community schools they maintain.  We expect these schools to have full access to funding for apprenticeship training and will support all employers, including schools and local authorities, in using levy funds to invest in quality apprenticeships.'