Last edited 04 Jan 2017

Apprenticeships levy

In the 2015 Emergency Budget, the Government announced that it would introduce a levy on large employers to help fund 3 million new apprenticeships by 2020 to help develop the skills base and drive productivity.

On 21 August 2015, the Department for Business, Innovation & Skills began a consultation on a new apprenticeships levy for employer owned apprenticeships training in England.

In a press release accompanying the opening of the consultation, it was suggested that the apprenticeship levy would be introduced in April 2017 to increase investment in training and apprenticeships and ‘level the playing field’ so every big company plays their part. Ref PM unveils plans to boost apprenticeships and transform training.

Investment in training in the UK has fallen over the last 20 years, and it is thought this is harming productivity, with UK GDP per hour worked 17% lower than the average for the rest of the G7 and 30% lower than the US and Germany. The government points to research that indicates for every pound invested in adult apprenticeships at Level 2 and Level 3, the country benefits by £26 and £28 respectively.Reduction in training 1995 to 2014.jpg

Skills Minister Nick Boles said, “Skilled people are the lifeblood of a strong economy but for too long UK businesses have invested too little in developing their employees’ skills to meet the demands of a competitive, global market. The apprenticeship levy will ensure that businesses invest in skills and training, and will act as a much needed shot in the arm for the country’s productivity.”

The apprenticeship levy will be applied to all ‘large’ employers, who will have an online 'voucher account' showing their levy contribution and digital vouchers that they can use to purchase apprenticeship training. In addition, there will be a requirement to take a company’s apprenticeship offer into account when awarding large government contracts and new ‘industry standards’ will be published.

Within the construction industry, the Construction Industry Training Board (CITB a non-departmental public body that reports to the Department for Business, Innovation and Skills) already has a mandate to collect a levy from construction employers and to use this to support training and skills. However, this mandate is due for renewal in March 2018.

It is intended that the construction industry will be within the scope of the new apprenticeships levy, and the consultation document suggests that the industry will need to decide how best the existing levy arrangements respond to the apprenticeship levy, suggesting:

‘One option is for employers in the construction and engineering construction industries to pay the apprenticeship levy whilst continuing to pay the existing industry levy. If this were to happen we would expect companies in the industries to fund their apprenticeships using the apprenticeship levy.’

‘Another option is to potentially remove the statutory industry levy arrangements completely, so that employers only pay the apprenticeship levy. This would represent a significant change to training arrangements in the construction and engineering construction industries and we would need to understand what effects this would have on the skills and capabilities of the UK construction industry.’

The consultation closed on 2 October 2015 at 11:45pm. More detail on the levy rate and scope will be provided later in the year.

In October 2015, a proposal which would involve large employers paying a levy on their PAYE payroll into the BIS fund, while a levy on their labour-only subcontractors would be paid to the CITB, was backed by 59% of 212 large employers surveyed by the CITB. Ref Construction Manager 13 October.

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