Opinion

Apprenticeship Levy: Business secretary sets out the challenge

Business secretary Sajid Javid this week launched a consultation on the proposed Apprenticeship Levy. In his forward to the consultation, reproduced here, he argues that staff must be seen as company assets not just balance sheet liabilities.

Rt Hon Sajid Javid MP, Secretary of State for Business, Innovation and Skills

To see a very graphic example of one of the biggest issues facing British business, you don’t have to delve into weighty economic textbooks or digest the opinion pages of the financial press. It’s right there on the balance sheet of any employer.

"Far from being a liability, the greatest asset any business has is its workers. And like any asset, your people need to be invested in."

While the “assets” column includes everything from money in the bank to stock in the warehouse, each and every one of the company’s employees are listed as “liabilities”.

It’s correct in accounting terms, but as a wider attitude it’s entirely wrong. Far from being a liability, the greatest asset any business has is its workers. And like any asset, your people need to be invested in. They need to be nurtured and trained. Yet CEOs who wouldn’t hesitate to boost competitiveness and efficiency by investing in new equipment have often been far too reluctant to invest in skills.

Our best vocational training is world-class, but for the past 20 years employer investment in training has been in a general decline. Much of what is spent goes on health and safety or senior management, rather than improving skills on the shop floor.

A fifth of the difference between Britain’s productivity and that of the US, France and Germany is down to a lack of comparative skills, so reversing this decline in on-the-job training is vital if we’re going to boost our national productivity and become a truly high-skilled, high-wage economy.

Around the world, apprenticeships have long been recognised as a crucial part of the most successful skills development systems. That’s why we’re committed to increasing the quality and quantity of apprenticeships in England, delivering 3 million starts in the next five years, putting minimum standards in place and putting apprenticeships on an equal legal footing with degrees.

"Government alone cannot solve the skills challenge we face. Nobody understands the skills employers need better than the employers themselves, so they must be placed in the driving seat."

We are also making it easier to hire an apprentice by abolishing employer National Insurance contributions for apprentices under the age of 25.

However, Government alone cannot solve the skills challenge we face. Nobody understands the skills employers need better than the employers themselves, so they must be placed in the driving seat. That is why we are introducing an apprenticeship levy that will let employers choose and pay for the apprenticeship training they want.

It’s a model that’s already working successfully in more than 50 countries around the world. This consultation sets out how it will work here in the UK, creating a system that benefits employers and the economy at large by helping us to invest in the single strongest asset we have – our hard-working, dedicated people.

This viewpoint is taken from the government's consultation on the proposed Apprenticeship Levy published to day. 

Rt Hon Sajid Javid MP is Secretary of State for Business, Innovation and Skills

If you would like to contact Antony Oliver about this, or any other story, please email antony.oliver@infrastructure-intelligence.com.