Government announces apprenticeship levy reforms

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Chancellor Philip Hammond has announced a package of new measures to reform the under-fire apprenticeship levy.

Under the revised rules, employers who pay the apprenticeship levy will be able to transfer a quarter of their funds to organisations in their supply chain, including smaller employers.

Levy-paying businesses have been able to transfer up to 10% of their training funds to other employers in their supply chain since April 2018, but the new measures will increase this to 25%.

The reforms also include £5 million of extra funding for the Institute for Apprenticeships, to improve training standards and update existing ones.

The Government is also to review the future role of the levy.

The announcement follows rising calls for reform among several business organisations, which criticised the levy for its inflexibility and burden on businesses.

After the year-on-year number of new apprenticeships dropped by 39% in April 2018, the Confederation of British Industry (CBI) said the levy system was “not working as intended”.

In response to the Chancellor’s announcement, Carolyn Fairbairn, director-general at the CBI, said businesses will be “delighted” to hear of the Government’s commitment to change.

Fairbairn added:

“Improving the range of high-quality courses available and helping supply chains work together to provide what is needed locally is what business has been calling for.

“But more is needed. The Government must act now to deliver a meaningful review of the levy that demonstrates it will continue to collaborate with companies.”

Adam Marshall, director-general of the British Chambers of Commerce (BCC), called the measures “an important step in the right direction”, but agreed that further action should be taken.

He said the Government’s review “must introduce greater flexibility to the apprenticeship system, to ensure that businesses of all sizes can find and train the workforce they need”.

The Chancellor announced additional apprenticeship reforms in Budget 2018, including reducing the co-investment required from smaller firms from 10% to 5%.

We’re happy to discuss the apprenticeship levy.

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