Tax on large firms to fund apprenticeships

A new tax will be levied on large companies to help deliver the government’s target of 3 million new apprenticeships by 2020, the Chancellor announced during the summer Budget statement.

The levy will fund apprenticeships for over-16s living in England, and will provide funding directly to employers in the form of a digital apprenticeships voucher.

Employers will be contacted ahead of the scheme’s implementation.

The measure aims to stimulate employer investment in training. Underinvestment by companies has become a long-term trend in the UK, with the number of employees attending external training courses falling from 141,000 in 1995 to 18,000 in 2014. The government’s long-term goal is to create 3 million apprenticeship opportunities across the next 5 years.

Petra Wilson, director of strategy at the Chartered Management Institute, welcomed the move:

“The apprenticeship levy on large companies has to go hand-in-hand with rapid action to make sure employers can access high quality apprenticeships at higher skills levels.

“We particularly support the employer-led development of a new degree-level apprenticeship in management and leadership. It will help employers train the leaders of the future and its focus on professional management will put British business on track to a more productive future.”

However, other industry groups warned that the proposal could sacrifice the quality of apprenticeships in favour of quantity.

John Allan, national chairman of the Federation of Small Businesses, said:

“The increasing focus on vocational on-the-job training is the right approach but we must not let the drive for greater numbers come at the expense of quality.

“While we welcome the exclusion of small firms from the proposed apprenticeship levy, we urge government to talk further with businesses about the wider implications and implementation of the levy.”

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