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North East Businesses in Dark on Apprenticeship Levy


Sep 8, 2016

A survey of businesses by the North East England Chamber of Commerce has shown there is very little awareness of the new levy aimed to support companies taking on apprentices.

The Chamber is calling on the Government to urgently clarify details of the Apprenticeship Levy where companies with a wage bill of over £3m will be required to pay 0.5% of their total payroll costs.  Employers will be able to claim this money back as a digital voucher to be spent specifically on apprenticeship training.

Paul Carbert, policy adviser, the Chamber said: “The introduction of the Apprenticeship Levy is a huge missed opportunity to support businesses to develop young people’s skills.  We believe the Government should allow organisations to use the levy funds to support other high quality workplace training, beyond just apprenticeships.”

Building services company and Chamber Partner member, John N Dunn Group, established in 1893, has a proud history of training apprentices, director Ian Steward said: “We are training 39 apprentices at present, which represents over 10% of our 300-strong workforce and is a huge investment and cost for us.  Our approach is firmly one that supports training the next generation of young people to work in the North East construction industry.

“However the Government’s planned levy will actually be detrimental to our training approach and means we could pay substantially more to train apprentices than we do at present.  As we currently employ more than 10% of our workforce as apprentices I strongly believe we should be exempt from this scheme given our huge commitment already to apprenticeships.  It is also worrying that competitors who have a wage bill beneath the £3m threshold will still have 90% of the apprenticeship costs paid by the government unlike us which does not provide a level playing field.

“In my view this makes the Government target of creating 3 million apprentices by 2020, in such an unprecedented, accelerated rate unachievable, especially considering the failure of the Government to take on board the concerns raised about the levy by employers.

“Key statistics in the survey, part of the national British Chambers of Commerce report, supported by Middlesex University, undertaken in August include:

  • 32% of firms in the North East still have no understanding, or haven’t heard of, the Apprenticeship Levy
  • 40% of firms in the North East don’t understand how apprenticeship funding differs above or below the £3m pay bill threshold

Few businesses believe apprenticeship reforms will change their training outlook with only:

–          10% saying reforms will increase their recruitment of apprentices

–          3% saying reforms will have a positive impact on their wider training budget

–          10% saying reforms will improve the quality of vocational training in their sector

The Chamber is holding a joint event with Gateshead College to explain more about the Apprenticeship Levy at the college’s Team Valley Training Centre on Monday, 10 October.

By Emily