The apprenticeship levy could see smaller businesses fold, a Devon training provider has warned.
Introduced in April this year, the Apprenticeship Levy is one of the biggest shake-ups of the training sector in recent years.
Mark Boulting, Managing Director of Devon-based training provider Skills Group, fears it could see many businesses fold as they are unequipped to handle the changes.
Mr Boulting said: “We are broadly supportive of the change in the long run. It is good news that the Government is raising funds but it has done it too fast with not enough forward planning, and that has put the whole system at risk.”
The Apprenticeship Levy is a way the Government is trying to raise funds to make apprenticeships sustainable for the future. It involves raising funds from employers to be able to fund apprenticeships while also giving employers ownership to design apprenticeships to suit their needs.
Employers with payroll above £3 million have to pay 0.5% of this via HM Revenue and Customs. Approximately two per cent of all employers in the UK will be eligible to pay. It is viewed by many as another tax. For big employers there will be a levy pot and they can choose an apprenticeship provider and spend money on apprentices. If it runs out, the Government pays 90% and the employer pay 10%, which should make it more sustainable for the future.
Small businesses have to pay a contribution of 10% for apprentices over 19-years-olds. For anyone they employ aged between 16 and 18, the funding comes from the Government unless the firm employs 50 or more people. There are also incentives to take on 16-18 year olds.
Mr Boulting said: “It is a huge change. The commitment of £3 billion from the levy is expected but the uptake has reduced because employers are getting used to the idea that they need to contribute to the cost.”
He fears that pressure on the public sector to have 2.3% per cent of its workforce as apprentices will see roles ‘badged as apprenticeships’ in order to meet the criteria.
He said: “The ones that will suffer most are young apprentices. According to published figures, the number of 16-18 year old apprenticeship opportunities has seen a significant drop of 75 per cent since the changes came in as it is easier for firms to retrain existing staff.
We think it is likely there will be a significant number of training businesses nationally that become insolvent. I also believe a third of business will fold because they are not geared up to deal with it. There is not much fat in the sector and it cannot deal with this amount of change.”
Mr Boulting called for more stability in the industry.
He said: “We have had three different ministers for skills, what other sector has had that much change in 12 months?
Employers need to get used to the idea that they need to contribute but in the short term may put it off and wait until they understand it more.
There are really difficult times ahead, and combined with the loss of overseas skills that Brexit will inevitably result in, we need good leadership and support more than ever.”
I always struggled in school as I wasn’t very academic, so knew learning on the job would be a better option for me. I would find it difficult to get up for 9am but now I wake up and look forward to my day. I wanted to try a hair apprenticeship as I’ve always been interested in hairdressing, and by the end of the first week, I already loved it!
I have developed a range of new skills through work including the technical, industry skills required for the job, to personal development such as ensuring I am always on time. The biggest change since leaving school is adjusting to the independence you gain from earning a salary. My advice to anyone thinking of doing an apprenticeship would be find what you like doing, and go for it!
Since starting the apprenticeship, I’ve become far more confident. In a classroom, you only interact with your classmates, but through working you develop your people skills as you interact with customers on a daily basis. At school, you are closely monitored and parented, however I am now more independent and feel grown up
The most important thing I’ve learnt since leaving school is that there are other routes to success than just academia. I failed my GCSEs, as I never suited the school environment. Now though, I’m really enjoying my apprenticeship as I’ve discovered I learn more through hands-on practice.
I would just like to thank you and your team for all the amazing work they do, you have provided me with the most invaluable experience which has helped to pave the way of my future. The work you do for young people is incredible!