Business groups call for 'urgent reform' of Apprenticeship Levy

09 Apr 2018

Business groups, including the Confederation of British Industry (CBI) and the Institute of Directors (IoD), have called for the government to reform its Apprenticeship Levy initiative as experts warn that the scheme could cost UK businesses ‘millions’.

The Apprenticeship Levy was introduced in April 2017, and is paid by employers with a pay bill of more than £3 million per year. The Levy is 0.5% of the pay bill, although there is an annual allowance of £15,000.

Data published by the Open University has revealed that £1.39 billion in funding has been paid into the scheme by UK businesses. However, firms have only been able to withdraw £108 million.

Funds must be used before April 2019 – after this time, they will start to expire.

Business groups are now calling for the government to introduce greater flexibility to the Levy.

‘Businesses all agree the Levy could be a vital part of the skills system, but its current form does not encourage more investment in high-quality training,’ said Neil Carberry, Managing Director of the CBI.

Meanwhile, the IoD stated that the Levy is ‘not working as intended’. Commenting on the matter, Seamus Nevin, Head of Employment and Skills Policy at the Institute, said: ‘We strongly advise that the Levy and co-funding system are reviewed in order to give employers the flexibility to develop the skills they need to be competitive, and to avoid any further drop in apprenticeship recruitment and training volumes.’