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Employment Law

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Veale Wasborough Vizards , 07 SEP 2015

Potential changes to apprenticeship rules - should large employers help fund apprenticeship schemes?

Potential changes to apprenticeship rules - should large employers help fund apprenticeship schemes?

Mark Stevens
Associate, Veale Wasbrough Vizards

On 21 August 2015, the government launched a consultation about, amongst other things, the introduction of an apprenticeship levy on large employers to fund apprenticeship training through 'digital vouchers'. The consultation closes on 2 October 2015.

Background

A consultation paper called Apprenticeship Levy: Employer owned apprenticeship training has been published by the government in order to canvass employers' views around apprenticeship training. As part of its proposal to boost the UK's national productivity, the government has proposed a scheme which it says will assist in funding the three million new apprenticeships announced in George Osborne's July 2015 budget. The consultation will close on 2 October 2015.

Benefit

It is proposed that the levy will provide a fund to help develop employers' long term training of apprentices. It is currently proposed that employers will receive vouchers to help fund apprenticeship training if the apprentice is 16 years old or over. All employers, whether they pay a levy or not, will have direct control over how the money will be spent, with employers expected to "get back more than what they put in". An online system has been proposed to monitor payments into the scheme and the allocation of vouchers to fund apprenticeship training.



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Cost

The actual levy rates will be announced in the government's spending review this autumn. At this point the consultation is seeking views on how the levy should be calculated. The government currently proposes to calculate the levy based on the employer's number of employees, through reviewing the employer's PAYE returns to HMRC.

Employers in the construction and engineering construction sectors who already pay training levies will be consulted as to whether they will continue to pay this on top of the new apprenticeship levy. This could significantly increase an employer's training costs if implemented.

Best practice

For clients in the construction, and aerospace and defence sectors, the proposed changes and introduction of a levy could have a significant impact. It remains to be seen how the funding proposed will assist employers to develop their apprenticeship and other training schemes.
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