Majority writing off apprenticeship levy as a business cost, warns research

Not only do employers seem confused about how the levy works, but they are also not taking it up.

A worrying two thirds of UK employers have either failed to use their apprenticeship levy funds directly or do not know they exist, according to research.

To make matters worse, most are simply writing the levy off as simply another business cost, with only 36% expecting to recover all, or most, of their payments to fund the cost of possible apprenticeships.

The survey conducted among 1,400 organisations by the British Chambers of Commerce (BCC) in conjunction with Middlesex University London also revealed that just under a quarter of those questioned still did not understand how the levy worked or how their company should respond to it.

The levy, which came into force in April, requires businesses with an annual payroll of more than £3 million (US$4 million) to pay 0.5% of their total wage bill into the levy pot. In return, the government gives an additional 10 pence on top of every £1 paid in order to train apprentices.

Jane Gratton, the BCC’s head of business environment and skills, said that as many companies currently faced critical skills shortages, more information and support was needed to ensure they continued to invest in training.

“For many businesses that pay the apprenticeship levy, it can feel like an additional employment tax, much of which they are unable to recover, and one that is deflecting training budgets away from other important training needs,” she said. “Firms need greater flexibility on how they can use their levy monies and a system that is fully operational as quickly as possible, that is simple and efficient, and that enables them to access good quality training.”

This reality behind this situation would appear to be backed up by Department for Education statistics. They revealed that only 10,500 apprenticeship service accounts were registered on the system by the end of August, just over half of the estimated 19,150 levy-paying firms that are eligible to use the service.