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Councils warned over ‘step-in-the-dark’ apprenticeship levy

The apprenticeship levy is “a step-in-the-dark” for councils, who need to prepare better to avoid unnecessary costs when it is introduced next year, according to a firm of apprenticeship experts.

The levy, due to be introduced in April 2017, will require all public and private firms with wage bills of more than £3m to pay a 0.5% levy towards the creation of three million apprenticeships.

The Strategic Development Network (SDN) warned that councils could face unexpected costs as a result of the levy, already predicted to cost £600m a year.

Colin Brentwood, SDN’s managing director, said: “There will be a new cost for larger employers and for many it will undoubtedly be a step-in-the dark, so they need to take action now to be ready in time.

“It’s a big issue for large employers including those in the public sector, who will see a significant hike in wage bills as the reforms come into play.

“The evidence suggests that thousands of employers will fall short with many unaware of the levy’s reach or how to spend it on apprenticeship programmes. It’s clear that more has to be done, and quickly, to bring people up-to-speed on these issues.”

However, the SDN said that councils could benefit from the levy by treating it as an investment. Tom Storey, director at K10, recently talked to PSE about how public sector bodies should view the apprenticeship reforms as a procurement opportunity rather than a burden.

The LGA is calling for devolution to councils as the best way to ensure the levy effectively meets local needs and reduces costs.

Cllr Nick Forbes, vice chair of the LGA, said: “It is critical that the money raised from the Levy is used in the most effective way.

“This can only be achieved by giving councils the powers to play a leading role in spending it on delivering apprenticeships, driving economic growth and raising productivity.”

In addition to the levy, all large public sector bodies, including councils, will be required to ensure that apprentices make up at least 2.3% of their workforce by the end of the decade.

SDN is running a series of online sessions on 13 and 17 May to help employers understand details of the levy, the implications for business, and how to develop a successful apprenticeship programme to deliver maximum value.

These will be followed by a workshop in London on 9 June, facilitated by Tony Allen, the former head of the large companies unit at the Skills Funding Agency, and Louise Doyle, SDN’s senior associate and apprenticeship expert.

To find out more about the SDN’s apprenticeship workshops, click here.

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