Apprenticeship levy overhaul welcomed

Businesses have welcomed the chancellor’s budget announcement of plans for changes to the controversial apprenticeship levy system. Philip Hammond has pledged to “engage with business on our plans for the long-term operation of the levy, working hand-in-hand with employers to ensure that every young person can fulfil their potential and achieve their dreams”.

The levy, which was introduced in April 2017, requires organisations with an annual payroll of at least £3m to pay 0.5 per cent of that into a digital account. This payment can then be reclaimed as vouchers to spend on apprenticeships training within two years. When it was first launched, only employers were able to spend their funds paid in. Earlier this year, the scheme was tweaked to allow businesses to offer up to 10% of their funds to other organisations.

However, the system has been the subject of much criticism with employers stating that the 20% off the job training requirement is difficult to achieve and a burden to employers.

Research has suggested that employers are failing to engage with the levy. According to an official report published last month, the number of new apprenticeships in the UK fell 28% between August 2017 and June 2018 for the 2017/18 academic year. The report revealed there were 341,700 new apprenticeships in the year leading up to June, compared with 472,500 in the previous 12 months.

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