Apprenticeship levy: Treasury slashes businesses’ contributions in half
Chancellor Philip Hammond has unveiled plans for a £695m initiative to help small firms hire apprentices in his Budget this afternoon.
The Treasury is cutting the small businesses co-investment level for apprenticeships from 10 per cent to five per cent.
Helen Dickinson, chief executive of the British Retail Consortium, said: “While the Chancellor’s recent announcement to review the apprenticeship levy is positive, retailers need action now before levy funds expire. The levy is not fit for purpose as retailers are unable to fully utilise funds. Businesses need the lifetime of funds to be extended while standards are finalised and more flexibility to use levy funds to cover the cost of backfilling roles while apprentices are off the job. The budget is a missed opportunity to demonstrate that the government is prepared to work with industry to ensure apprenticeship levy reform is successful.”
Federation of Small Businesses (FSB) national chairman Mike Cherry said: “Apprenticeship starts have plummeted over the last year following the introduction of burdensome co-investment costs for small firms who want to bring young people into the workplace. Dropping the proportion of apprenticeship training costs footed by small firms from 10 per cent to 5 is a much-needed development which should go some way to arresting the shocking decline in apprenticeship starts. If we want parity of esteem between vocational and academic routes into the workplace, we need to incentivise small firms to take on apprentices. Today’s announcement marks a step forward.”
The news comes several months after the government said it would ease its controversial apprenticeship levy used to finance workplace-based training, revealing plans for greater flexibility for businesses and expanded apprenticeship courses in science and other STEM subjects.
An influential committee of MPs recently urged the government to do more to help apprentices in a new report that says those in workplace-based schemes have been “let down by poor quality training and lack of support”.
The Parliamentary Education Committee has called for greater efforts to recruit apprentices from disadvantaged backgrounds, along with a tripling in the number of approved apprenticeship providers and an expanded role for Ofsted inspections.