Large consultants could be out of pocket with new Apprenticeship Levy

Large infrastructure businesses could be asked to pay 0.5% of UK payroll into the Government’s planned new apprenticeship levy, consultation for which was announced today.

While many firms of 250 plus personnel do currently train apprentices, there are a large number, particularly in consultancy, which risk finding themselves as net contributors rather than beneficiaries of the levy if apprenticeship training levels remain as they are, industry training experts predict.

The Apprenticeship Levy is a key plank underpinning Government’s commitment to support 3M new apprenticeships across all industries by 2020 and build on the 2.3M apprenticeships created in the last parliament.

“The levy gives us the opportunity to level the playing field between those larger employers who do train, and invest to do so, and those who do not, by re-directing unused funding,” -  Government.

More than 30,000 of these are to be created in the road and rail industry, it was announced today. And Crossrail and National College for High Speed Rail chairman Terry Morgan is to to develop a transport and infrastructure skills strategy, to help the transport industry ensure a continuous pipeline of skilled workers.

Employers will pay in to the levy and receive vouchers to exchange for apprenticeship training costs.

According to the CBI the levy rate to fund apprenticeship training is expected to be set out in the Spending Review in the Autumn.

“We are working on the assumption that the rate will be around 0.5% of payroll. This reflects comparable schemes elsewhere and would generate the sorts of sums needed to fund the expansion of the apprenticeship programme,” it said in a briefing note.

“The levy gives us the opportunity to level the playing field between those larger employers who do train, and invest to do so, and those who do not, by re-directing unused funding,” the Government consultation says.           

“We expect those employers that are committed to apprenticeship training will be able to get back more from the levy than they put in, because not all employers will choose to carry out sufficient apprenticeship training to use their contribution in full.”

Apprenticeship schemes are growing in professional services firms but most still recruit a larger proportion of graduates so could end up paying in more to the levy than they will use in training investment, according to training experts.

The amount that UK businesses have invested in training has fallen consistently over the last 20 years and Government says this has had a direct impact on  UK productivity which now lags behind other major Organisation for Economic Co-operation and Development (OECD) countries.

Levy systems already operate in over 50 countries, including Netherlands, Denmark and South Korea.

From 1 September 2015, all bids for government contracts worth more than £10 million must demonstrate a clear commitment to apprenticeships. In particular, employers’ bids will be reviewed in line with best practice for the number of apprentices that they expect to support.

The Technician Apprenticeship Consortium which represents 19 consultancy firms and has 1000 apprentices in training will be meeting with the Department for Business, Innovation and Skills at its national group meeting in September to discuss the impact of the levy.

Meanwhile the consultation is also seeking views on the future of the CITB which is already funded by industry levy.

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