Further detail on how the Apprenticeship Levy, announced by former Chancellor George Osborne in last year’s Autumn Statement and due to be introduced on 6 April 2017, was announced by the new apprenticeships and skills minister Robert Halfon on Friday.
He revealed that employers not paying the levy will get 90 per cent of the costs of their apprenticeships paid, with extra funding and support for 16-18-year-olds, young care leavers and young people with an education, health and care (EHC) plan.
Employers will also be able to use the funds to re-train workers in new skills, in a different type of work than their previous role, even if they hold existing qualifications.
He said that: "We need to make sure people of all ages and backgrounds have a chance to get on in life. Apprenticeships give young people - especially those from disadvantaged backgrounds - a ladder of opportunity. That’s why we continue to work tirelessly to deliver the skills our country needs. The Apprenticeship Levy is absolutely crucial to this."
The Apprenticeship Levy guidance does not change some of the central tenets of the Apprenticeship Levy which some employers were concerned about.
It will still apply to all employers in the UK whose wage bill is more than £3m a year, at a rate of 0.5 per cent, subject to a £15,000 levy allowance. The government has created an online calculator for employers.
Levy money paid by English employers will be returned to them in the form of training credits, through a new digital apprenticeship service which can be used to pay for training by approved apprenticeship providers. These can be used for apprenticeship training, end-point assessment and some incidental costs but not for apprenticeship wages, or for non-apprenticeship training that a company may provide. The government has also pledged to top up levy payments by an extra 10 per cent.
Employers in other parts of the UK have separate, devolved schemes.
The British Retail Consortium’s chief executive Helen Dickinson expressed support for the levy in general but called the decision to press ahead with the levy’s original start date as "a big disappointment".
"There is widespread concern in retail and other industries that had an over-hasty introduction of the Apprenticeship Levy and the design of its current proposals will fail to create apprenticeships at scale and drive up the quality of training.
"Retail is undergoing extensive change and that change is having a dramatic impact on our workforce. It is essential that future jobs in retail offer high-quality, rewarding employment. That requires taking the time to design an employer-led solution to the levy so as to encourage employers to spend on high-quality training.
"As it is, there is a risk the levy fails both to realise its potential and reach the growth rates required in apprenticeship starts. That is why the government should delay its introduction to 2018, allowing more time to design a truly viable system that delivers high-quality training."
The details of how the levy will work were delayed in the run up to the EU Referendum, the resulting Conservative Party leadership election and new Prime Minister Theresa May’s cabinet reshuffle.
In addition, responsibility for apprenticeships and skills was moved from the Department of Business Innovation and Skills, now refigured as the Department of Business, Energy and Industrial Strategy to the Department of Education, just months before the levy was due to be launched in April 2017.
This disruption, plus post-Brexit vote uncertainty and the prospect of the UK economy going back into recession have all been factors in the call for a delay in bringing in the levy.
The Institute of Directors has called the levy a big cost for many companies and the CBI a significant extra tax, particularly for medium-sized firms. While it welcomes the levy as a concept it is still calling for a "radical re-think" of the policy, as well as a delay in implementation, to avoid damaging the quality of training overall.
CBI director-general, Carolyn Fairbairn, said: "The Apprenticeship Levy in its current form risks turning the clock back on recent progress through poor design and rushed timescales.
"The April 2017 start date will not give firms sufficient time to prepare, so we urge the Government to delay implementation. Though business understands the fiscal challenges, it would be a great mistake to rush ahead before a viable scheme is ready"
The government is consulting on the funding proposals, until 5 September, with further details due in October.
