EP Perspective March 2017
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COMMENT: APPRENTICESHIP LEVY<br />
WHEN THE LEVY<br />
COMES INTO PLAY<br />
Most large companies train their staff to their own requirements<br />
yet are subject to the new Apprenticeship Levy. Bob Cotton and<br />
Miles Quest argue that the levy will not achieve its purpose.<br />
When George Osborne rushed the<br />
Apprenticeship Levy into his last budget –<br />
at 0.5 per cent of a business’s payroll over<br />
£3m, raised monthly from PAYE returns –<br />
it gave the impression then of being hastily<br />
introduced. True to form, the details are<br />
still being worked out with announcements<br />
coming through every week even though the<br />
levy comes into force next April. With little<br />
or no prior consultation with industry before<br />
the announcement, employers now have to<br />
scramble to understand the implications of<br />
the measure.<br />
Clearly, the government, concerned about<br />
the rising cost of further and vocational<br />
education, has placed the responsibility<br />
of training fairly and squarely on employers –<br />
and is using the stick and carrot of the<br />
levy to ensure that the largest employers<br />
can’t escape. In view of the industry’s patchy<br />
training record this might be thought to<br />
benefit hospitality but there are tens of<br />
thousands of small employers who will<br />
escape the levy and only a few hundred<br />
large enough to pay it. The burden is on the<br />
largest employers.<br />
Many details, however, are still to be<br />
worked out. Each company’s levy will<br />
build up a fund, which will be added to by<br />
the government at 10 per cent, from which<br />
the company can withdraw money to pay<br />
expenses related to the training of the<br />
apprentices they employ. If the levy raised by<br />
each company is unspent after 18 months it<br />
reverts to the Treasury. So the scheme aims<br />
to encourage businesses to employ as many<br />
apprentices as possible in order to recoup<br />
as much as they can from their fund. The<br />
government believes this will create<br />
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22 | <strong>Perspective</strong> | <strong>March</strong> <strong>2017</strong>