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East Midlands Chamber News

Chamber welcomes new flexibility in Apprenticeship Levy

The Government has announced that large employers can now share their Apprenticeship Levy funds among multiple companies in their supply chains.


Previously they could nominate only one company to receive help from the levy, a 0.5% tax payable by firms with payroll of over £3m a year. Nominated firms could receive up to ten per cent of the levy value.


Introduced in May 2017, the levy was intended to increase the number of apprenticeship starts to three million by 2020 but has led, instead, to a decline.


Ian Bates, Sector Forums Manager at the Chamber, whose role includes working with employers and academia and running the Chamber’s annual Skills and Employability Summit, said: “We welcome this improved flexibility, it will go some way to widen opportunities for improving the availability of skilled workers, however more wide scale transformation is needed to make the system fit for purpose.


“The levy didn’t achieve what the Government intended. Our own research has shown that most large employers did not expect to recover what they were paying out under the levy and many smaller employers don’t fully understand it or won’t use it at all.


“Allowing large employers to share the levy among multiple companies in their supply chain will, hopefully, result in those smaller companies being able to upskill their workers and to recruit new apprentices, thereby securing skilled workers for the future.


“We have recently seen the British Chambers of Commerce, in partnership with the Chartered Management Institute (CMI), publish a ten-point-plan, to reform the Apprenticeship Levy system, which clearly sets out the asks for Government and for business.”


Since the levy was introduced, Government has twice previously shown flexibility in how it can be used, by allowing levy-payers to include a single supplier and allowing the fund to pay for upskilling existing workers.


The latest adjustment allows the levy-paying firm to nominate any number of suppliers to receive the ten per cent benefit.


The British Chambers of Commerce ten-point plan can be found here: https://bit.ly/2IvthwS