Government backtrack leaves employers in limbo

Written by Fay Gibbin on 27 November 2018

Reading time: 3 minutes.

Since the introduction of the apprenticeship levy last year, there has been some confusion around how it works and how businesses can use the funds available to them. Many people working in training, further education and in business believe this confusion has contributed to a downturn in apprenticeship starts

That’s why it was great to hear the positive news in the Chancellor’s 2018 Budget regarding apprenticeship funding and changes to the levy. In new plans outlined on 29 October by Philip Hammond, the government pledged a further £695m to support the uptake of apprenticeships for both large and small to medium businesses.

It is brilliant news for further education, training and the businesses who support their workforce. However, we don’t know when these plans will roll out.

Positive news

When the changes take effect, large businesses will be able to transfer up to 25% of their apprenticeship levy funds to support businesses they work with. This is limited to just 10% currently, so the change comes as welcome news for employers who wish to support businesses in their supply chain. 

It is brilliant news for further education, training and the businesses who support their workforce. However, we don’t know when these plans will roll out.

SMEs that don’t have to pay into the levy, but benefit from co-investment funding from the government, will only pay half of what they currently pay for apprenticeship training. This is set to decrease from the 10% they pay now to 5%, with the government paying the remaining 95%.

The announcement to increase government funding for SME’s investment into apprenticeships by 5% is a welcome move. Small businesses with fewer than 50 employers already benefit from 100% government-funded apprenticeship places, and the increase allows more businesses, specifically those with an annual pay bill under £3m, to offer quality training to its aspiring workforce at lower cost.

Businesses in limbo

These changes should go some way to helping reverse the current trend but uncertainty around when they come in has tainted the news. 

It was originally announced that the new changes would be coming in from April 2019. Yet since the announcement, a Treasury spokesperson has said that Education and Skills Funding Agency (ESFA) will confirm a date in due course and that the mention of April 2019 was a ‘misunderstanding’.


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The unclear introduction of changes to the co-funding will have a negative impact on apprenticeship uptake and leaves businesses in limbo. By delaying the introduction, we may see the level of apprenticeship uptake decrease further as most employers will hold off training people until the reduced co-investment comes into place.

The longer businesses have to wait for a date to be set on when the changes for funding come in, the more time is wasted when employees could be undertaking valuable training. 

Surely this outcome is in contradiction to the government’s aim to support apprenticeship training. Following a 30% drop in apprenticeship starts in 2017 from the previous year, this promised yet elusive date for extra funding puts already declining figures under risk of falling further.

In 2017, the care industry saw more than 125,000 apprenticeship starts in a sector managing a 30% staff turnover and 8% vacancy rates. This proves that apprenticeships are a solution to the UK’s increasing skills gap crisis, so it’s great to see that the government has recognised this by pledging £695m to support the uptake of apprenticeships. 

I hope to see a concrete date set soon, so businesses can start planning for their workforce and take advantage of their levy funds.

 

About the author

Fay Gibbin is CEO of BB Training Academy

 



 

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