London Councils raises concern over ‘inflexible’ apprenticeship levy

Concern has been raised by London Councils over the government’s new levy to boost apprenticeship opportunities in the UK, saying that the policy’s lack of flexibility could lead to councils not being able to spend their allocation and it being “reabsorbed” by government after two years.

The levy, which came into effect on Thursday 6 April, will require employers in the UK with an annual wage bill of over £3m to pay 0.5% into funding apprenticeship schemes.

Money raised in the levy is expected to double the current investment in apprenticeships in England to £2.5bn by 2019-20 compared to figures from 2010-11. Smaller employers with a wage bill of under £3m will not have to pay for the levy as the government will cover 90% of the costs of training and assessing apprenticeships.

Previously, the IFS had warned that government targets to create three million apprenticeships by 2020 were ‘cavalier’ and may just encourage employers to rename existing employment schemes to fall in line with targets.

Cllr Peter John OBE, deputy chair of London Councils and executive member for business, said that whilst London Councils were pleased that the government is allowing levy funds to be transferred between employers from next year, the proposal to cap it 10% is too small for those employers, like London boroughs.

He said: “We remain concerned that this lack of flexibility will lead to London employers being unable to spend their allocation, resulting in funds generated in London being reabsorbed by government after two years and spent elsewhere.

“Instead, London government want to see a ring-fenced share of the capital’s apprenticeship levy devolved to help us increase starts at higher levels, build capacity with SMEs and work with employers to identify gaps in apprenticeship standards.

“We look forward to having the opportunity to make this case as part of future discussions on devolution with government following the recent announcement of the devolution memorandum of understanding.”

Skills minister Robert Halfon commented that there had never been a more important time to invest in skills in people and businesses, and that the levy would create a fairer system that will offer opportunities to a variety of young people.

“Our apprenticeship levy is a massive part of this,” Halfon said. “More than 90% of apprentices go into work or further training, and the quality of on-the-job training on offer will make sure we have the people with the skills, knowledge and technical excellence to drive our country forward.

“Building an apprenticeship and skills nation is essential in ensuring that we have the home-grown workforce we need in post-Brexit Britain to address the skills shortages facing industry and give everyone the chance to succeed.”

Union TUC also added its support to the introduction of the levy. General secretary Frances O’Grady said that it was “good news for workers,” as more will be given the chance to build vital skills required to break into well paid jobs.

“Unionlearn, the TUC and trade unions across the UK are looking forward to working with employers to make the expansion of good quality apprenticeships a success,” O’Grady stated.

Teachers call for levy exemption

However, teaching unions did not give an equally glowing assessment of the new scheme. Dr Mary Bousted, general secretary of the Association of teachers and Lecturers (ATL), warned the government that the levy could actually threaten the existence of smaller council-maintained schools if it was enforced on them.

“It is unacceptable that the Department for Education has given schools insufficient time to prepare for the levy - clarity about the impact on local authority maintained schools and communications to head teachers and governors has been too little, too late,” she said.

Dr Bousted also raised concern that schools would have appropriate roles for apprentices to enable them to recoup their levy payment for training.

“With teachers dealing with excessive workloads, there is little capacity to ensure the apprentices are properly mentored within schools,” she said.

And Russell Hobby, secretary of head and deputy head teachers’ union NAHT, said that the levy would come as another cost to schools who were already struggling with maintaining education standards under a £3bn funding blackhole.

“We know that schools have been making difficult decisions to make their budgets balance. We know that they are running out of things to cut without impacting on the quality of education provided,” Hobby said. “This additional cost from today, compounded by the fact that many schools will not be able to make use of the training opportunities provided because of the nature of education, is a further unwelcome cost for schools.”

Hobby stated that schools needed the same exemption from the levy that academies were currently offered, a measure also recommended by the LGA at the start of the year.

“If not, small maintained schools will unfairly face yet more costs,” he claimed. “This hard-headed assessment is crucial if the government is to truly start to understand the real cost pressures schools face.”

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