By Catriona Lingwood, Chief Executive of Constructing Excellence in the North East
Remember a few weeks back when Chancellor George Osborne announced the new apprenticeship levy which was to be paid by ‘every big company’ in England? Well, according to speculation that could be all about to change, and the potential new changes could massively affect small to medium sized businesses.
This week the government suggested that it may cut the definition of ‘larger’ companies from those with 250 plus staff down to as few as 50 employees. This would result in thousands more companies in the industry paying two apprenticeship levies, which when the apprenticeship levy was suggested back in October, companies made it very clear they wouldn’t be willing to do – completely understandable in an industry where margins are tight.
The possible shift in policy was aired at a meeting held last week at the Confederation of British Industry (CBI), attended by a number of construction sector organisations.
However, the view from the CBI was that the 50 employee threshold being floated in government circles was nothing more than a “scare tactic” and could well be revised upwards to 100 staff. Scare tactic indeed, it certainly scares me, as a supporter of both SMEs and apprenticeships, who knows how the change could affect apprentices.
So far the only reasonable solution that has been suggested is that the rate at which the new levy is paid would be tiered; meaning smaller firms which cross the new, lower threshold would pay less than the larger companies.
Luckily by Wednesday all speculation stopped, with the Chancellor’s spending review telling us that the new apprenticeship levy will be set at a £15,000 threshold for employers, meaning that the new levy will only be paid on employers’ pay bills of more than £3 million, so essentially larger companies.
According to the Chancellor fewer than two per cent of employers will pay the levy, meaning small and medium sized businesses can breathe a sigh of relief and probably feel a lot better now than they did at the beginning of the week.
The apprenticeship levy is set to be implemented from 2017. It was designed to increase investment in training and forms part of the government’s pledge to support three million apprenticeships by 2020, which according to Mr Osborne it is still on track to do. The levy will raise £3 billion a year and promises that employers paying into it will get out more than they put it.
So for now, we’re a lot more in the know than we were at the beginning of the week, with speculations appearing left right and centre. We now know who will have to pay the levy and how much it will be. For now we’ll have to put our faith in the government that the levy can successfully deliver everything we have been promised.