IGA News

Apprenticeship Levy Consultation

Apprenticeship Levy Consultation

27 August 2015

The Department for Business, Innovation & Skills (BIS) has published a consultation on their proposal to introduce an apprenticeship levy.

BIS want to put employers at the heart of designing apprenticeships, and give employers control of the funding. If the levy goes ahead, larger employers will have to contribute funding to apprenticeship training from 2017, tackling skill shortages and creating higher quality apprentices.

The Government wants to ensure that paying the levy is as straightforward as possible and therefore intends for the levy to be calculated on the basis of employee earnings and for employers to pay the levy through their PAYE return to HMRC.

The levy will apply to employers in all sectors, but will only apply to larger employers. The Government intends that the size of employers will be calculated in relation to the total number of employees.

Over 200,000 workplaces currently hire apprentices, the vast majority of which are small businesses. Because larger employers shouldn’t be the only ones who are in control of their apprenticeships, the Government are proposing that employers of all sizes in England will use the same digital voucher system to pay for the apprenticeship training they want. As such, all employers, both those who pay the levy and those who do not, will use the same system. Using a single digital voucher system means that employers of all sizes can take control of their own apprenticeships in a way that they never have before.

A single system for all employer types also means that as an employer grows their use of the system will grow with them, rather than having to grapple with a different way of doing things just because they have changed size.

In the autumn, BIS will set out more detail about how employers who are outside of the scope of the levy can access apprenticeships funding.

You can read the full proposal here.

You can also read the original case put forward for an apprenticeship levy by the Social Market Foundation here.

Following the publication of the proposal, BIS are seeking views on:

  • How to pay the levy
  • How the levy should work for employers who operate across the whole of the UK
  • How to make sure that employers paying the levy have the opportunity to get more out than they put in
  • How best to give employers control of apprenticeship

The RMI will be sending back a response to the proposal. If you would like to add your views, please contact our member helpline on 0845 305 4230.