Accountants call for simplification of apprenticeship levy

The apprenticeship levy system remains deeply unpopular with professional services firms in the UK, who view it as an extra tax that complicates learning and development, and should be radically simplified, according to research by the Managing Partners’ Forum

Introduced in April 2017, the levy applies to firms with annual pay bills in excess of £3m, taking 0.5% of an employer’s paybill to put toward funding for new apprenticeships.

In its second annual survey on apprenticeships, getting on for half (42%) of firms responding said they not received anything back from paying the levy, and only 39% of levy payments were expected to be utilised by the two-year expiry date.

Over half (60%) viewed the levy as complicating their learning and development activities, while a third (32%) said that it has displaced budget away from the most needed learning and development within their firm.

More than a quarter (28%) said the introduction of the levy has made professional development less attractive due to the label of ‘apprentice’, and 24% said that it has increased the cost of training.

Growth projections for apprenticeships by reporting firms are significantly affected by the complexity of levy rules and the costs of apprenticeship schemes, according to 78% and 73% of firms respectively.

These projections are also heavily dependent on external factors, in particular the number of vacancies to be filled (84%) and the availability of suitable people (82%).

If the rules were simplified, growth projections for apprenticeship numbers at sector firms could increase from 16% to 46%.

Richard Chaplin, founder and chief executive of the Managing Partners Forum, said: ‘Given professional firms have been investing huge amounts in quality training for decades, it is perhaps unsurprising that the levy is viewed by many as an extra tax that complicates learning and development.

‘The near six-fold increase in the numbers of higher-grade apprentices at sector firms since the levy was introduced is welcome but, to a large extent, reflects re-labelling of those that would formerly have been called trainees.

‘There is clearly support for the concept of apprenticeships, not least because of their important potential role in helping to address persistent issues around diversity and social mobility within the professions. However, simplification of the rules around apprenticeships – and particularly the levy – must be considered for the real potential impact to be realised.’

2019 survey on the UK Apprenticeship Levy

By Pat Sweet

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