Majority of businesses don’t expect to recover apprenticeship levy payments

29 Sep 2017 By Emily Burt

Report highlights ‘worrying level of confusion’ over the levy, experts warn

The majority (56 per cent) of levy-paying organisations do not expect to recover their apprenticeship levy payments in full, an annual workforce survey of more than 1,400 businesses has found.

The findings, published by the British Chambers of Commerce (BCC) in conjunction with Middlesex University London, revealed that most levy-paying companies are treating the levy as just another cost, with only a third (36 per cent) expecting to recover all, or most, of their payments.

Since the levy came into force in April, businesses with an annual payroll of more than £3m have been required to pay 0.5 per cent of their total wage bill into the levy pot. In return, the government adds 10p for every £1 paid to train apprentices.

The research also found that, of those organisations that were not large enough to be levy-payers but were still eligible to apply for apprenticeship funding, two-thirds (66 per cent) had either not taken any direct action to use the funds or did not know about them.

Jane Gratton, head of business environment and skills at the BCC, said that as many companies across the country faced critical skills shortages, more information and support was required to make sure companies continued to invest in training.

“For many businesses that pay the apprenticeship levy, it can feel like an additional employment tax, much of which they are unable to recover, and one that is deflecting training budgets away from other important training needs,” she said. “Firms need greater flexibility on how they can use their levy monies and a system that is fully operational as quickly as possible, that is simple and efficient, and that enables them to access good-quality training.”

Lizzie Crowley, skills adviser at the CIPD, added: “The report highlights a worrying level of confusion among UK businesses with regards to the apprenticeship levy. There is a clear need to increase the level of engagement with, and support for, businesses to ensure that the levy adds value and delivers growth in the number of high-quality apprenticeships.”

The survey also found that a quarter (23 per cent) of levy-paying organisations still didn’t understand how the levy worked or know how their company should respond to it, reflecting findings from previous surveys that have revealed high levels of confusion among employers.

A spokesperson from the Department for Education said: “We want all employers to understand the benefits that high-quality apprenticeships and the apprenticeship levy can bring them. That is why we will continue to work with employers and training providers, showing them how much they will pay and how they could use their funds for training.

“The apprenticeship reforms put control back into the hands of employers but we know there will be a period of adjustment while employers understand better what the reforms can do for their business. Employers will also need time to plan ahead to maximise the opportunities that apprenticeships can bring.”

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