BCC: Businesses in the dark on Apprenticeship Levy

On the day that business, government, and education leaders gather in London for the BCC’s Business and Education Summit, the British Chambers of Commerce publishes a survey of businesses that shows a lack of clarity among businesses over the government’s apprenticeship funding reforms, including the Apprenticeship Levy.

With just over six months to go until the Apprenticeship Levy is introduced, the survey of over 1,600 business leaders across the UK undertaken in August 2016 and supported by Middlesex University, shows that nearly 2 in 5 (39%) business people still have no understanding, or haven’t heard of, the Apprenticeship Levy.

The survey also shows that many medium-sized businesses (employing between 50-249 staff) will have to pay the levy, with 30% of those surveyed saying that they will fall under the scope of the Levy. Furthermore, only a quarter (26%) of businesses expect to recover all or more of their Levy payment – suggesting that for most businesses, it will feel like a tax.

The survey demonstrates that the government has so far failed to adequately communicate the apprenticeship funding policy. The success of the drive to increase the uptake of apprenticeships and invest in training depends on much better clarity. The government must improve on this, and ensure that businesses are aware of the funding reforms, and how it will affect businesses, ahead of the April 2017 implementation date.

Key findings in the survey:

• 39% of firms still have no understanding, or haven’t heard of, the Apprenticeship Levy
• Just over half – 51% – of businesses don’t understand how the funding reforms work above or below the £3m pay bill threshold
• 30% of medium-sized businesses say that they fall under the scope of the Levy
• Businesses don’t believe that apprenticeship reforms will change their training outlook – only 11% say reforms will increase their recruitment of apprentices, while just 5% say they will have a positive impact on their wider training budget

Commenting, Marcus Mason, Head of Education and Skills at the BCC, said:

“Firms value apprenticeships as way of developing skills and increasing productivity. However, with just six months to go until the Levy is introduced, our research shows the government needs to step up its communication to business.

“The government needs to ensure that businesses understand how they could benefit from the reforms, because if it just feels like yet another tax then then the policy will have failed. Devolved administrations also need to provide a guarantee that the money raised is ring-fenced and kept for training.

“The government should allow businesses to use the Levy funding to support other high-quality workplace training or there is a risk of displacing other valid forms of training. Fundamentally, treating apprenticeships as a numbers game would benefit neither businesses nor apprentices themselves.”

David Williams, Director Corporate Engagement at Middlesex University, added:

“At Middlesex University we are focused on providing students with the skills they need to succeed in the modern workplace.

“We are currently working with a range of employers on Degree Apprenticeships and seeking to understand fully the impact on each organisation’s performance of their higher level work based learning and apprentice programmes. It is really important that government communicates to businesses the value of the levy in terms of its use to drive up the quality of on-the-job training and development”.