Apprenticeship Levy: someone’s got to pay for the next generation

Employers will be charged 0.5 percent of their annual wage bill to create an individual pot of money, which they can access to specifically pay training providers for apprenticeship training.  The government has committed to adding 10 percent to this money to allow companies to spend more than they have paid in.

Smaller companies will be effectively exempted from the levy due to a £15,000 allowance, available to all payers, to offset against their levy taken through the PAYE system.

So, if their annual wage bill is below £3,000,000 they effectively pay nothing. For the larger companies, they’re paying an additional tax, but they are able to get it back as long as they use it to train apprentices.

In business we all seem to agree that there is a problem with training, as well as an historic skills gap, which is being perpetuated by a lack of contemporary training.

There are however a lot of people, 45 percent of CBI members for example, who complain that the levy will force up prices.

This, of course, is ludicrous as, just like minimum wage legislation, any business that argues thus, is asking for a sub to enable them to sell below the real market price.

Basically, someone needs to pay to train our next generation of skilled people, and those who will make money from their existence should have to put their hands in their pockets.

And there’s more wrong-headed thinking too in the form of the 39 percent of CBI members who complained that the levy would lead them to reduce the amount of non-apprenticeship training.

Well guess what? That’s the actual point you idiots!   The policy is designed to redress an imbalance. And increasing the percentage of apprenticeships, as a total of all training, within companies is exactly what is desired.

And anyway, who said that while training in a specific economically-useful skill, such as being a plumber, an apprentice doesn’t pick up a huge amount of abilities that make some ideal candidates for management positions? Former apprentices, I’m told make great business people, CEOs even!

I suspect the detractors just don’t want to pay for the policy quite so obviously and directly. But to my mind that’s the beauty of the levy, in that it puts pressure on employers to train people because they can see that it’s their hard earned money they’re directly using, or potentially losing, and if they don’t use it, one of their smaller competitors down the road might get it, or the Government will trouser it.

Someone has to pay, and maybe, as with any fledgling scheme there may need to be some tweaking, but a scheme that pushes companies towards employing more apprentices is no bad thing.

Now all we need to do is turbo-charge the levy by redirecting benefit payments to employers to cover apprentices’ wages and we’ll stand half a chance of plugging the skills gap.

Charlie Mullins

About Charlie Mullins

Charlie Mullins is the archetypal entrepreneur having started Pimlico Plumbers from scratch and building it into a multi-million pound enterprise. Always opinionated and often controversial, Charlie’s common sense attitude has earned him a reputation as one of the UK's most outspoken entrepreneurs.

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