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UK government confirms April 2017 start date for apprenticeship levy


The UK government is pressing ahead with plans to introduce a new levy on the largest businesses in England in order to fund apprenticeships from April 2017, according to the latest consultation on the proposals.

Under the plans, only those businesses with a wage bill of £3 million or higher will be liable for the levy, at a rate of 0.5% of payroll. The levy will be used to fund ‘digital accounts’ from which employers will be able to pay for apprenticeship training, while smaller businesses and additional apprentices for those that wish to spend more than what is in their account will have 90% of the costs of training paid for by the government.

Additional support will be available for businesses taking on apprentices aged between 16 and 18 and young care leavers, according to the consultation. In addition, the government will fully fund training for these apprentices for businesses with fewer than 50 employees.

The plans set out in the consultation will apply to employers in England. Scotland, Wales and Northern Ireland have their own apprenticeship funding schemes. Where a business operates cross-border, funding will be available through the English scheme if the apprentice’s workplace is in England, according to the consultation.

The consultation closes on 5 September, and the government intends to confirm the final funding proposals in October.

Skills minister Robert Halfron said that the levy was an “absolutely crucial” part of ensuring that “people of all ages and backgrounds have a chance to get on in life”.

“Apprenticeships give young people – especially those from disadvantaged backgrounds – a ladder of opportunity,” he said.

“Our businesses can only grow and compete on the world stage if they have the right people, with the right skills. The apprenticeship levy will help create millions of opportunities for individuals and employers. This will give our young people the chance they deserve in life and to build a highly-skilled future workforce that the UK needs,” he said.

The consultation envisages an apprenticeship funding system made up of 15 “bands”, each with an upper limit ranging from £1,500 to £27,000. All existing and new apprenticeship frameworks and standards will be assigned to one of these bands. The upper limit of each funding band will cap the maximum amount of funding that a levy-paying employer can use towards and individual apprenticeship, or that a non-levy paying employer will be able to access from the government.

The government intends to create a new register of training providers, which will be ready for use from April 2017. Employers will be able to use this register to identify a high-quality training provider that best meets their needs. Under the new scheme, employers will also have the power to decide exactly what training their apprentices receive and which provider they receive it from.

The levy will apply across all fields of business, including those that already have industry-specific levy-funded apprenticeship training programmes in place. The Industry Trading Boards for the engineering construction and film industries will consult their members on potential changes to the existing levy arrangements, the government said; while the Construction Industry Trading Board (CITB) has already agreed a transition package for those employers due to pay both levies ahead of formal proposals for reform anticipated shortly.

Some businesses and business bodies had urged the government to delay implementation of the new levy until the impact of the recent vote to leave the EU on employers was better known. Responding to the proposals, the CBI in particular urged the government to “take a step back from the political timetable and consider what is best for building the skills of our young people”.

“The April 2017 start date will not give firms sufficient time to prepare, so we urge the government to delay implementation,” said Carolyn Fairbairn, the CBI’s director general.

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