Apprenticeship Levy to cost public sector £700m annually

George Osborne

The Apprenticeship Levy announced at the Autumn Statement will cost public sector employers around £700m when it is introduced in 2017, the Chancellor of the Exchequer has revealed

The figure is included in a letter sent by George Osborne replying to questions about the impact of the new levy on the public sector, posed by Andrew Tyrie, chair of the Treasury select committee in a session at the end of last year.

The levy of 0.5% on company payrolls of over £3m is designed to raise £3bn a year and fund three million apprenticeships by 2020. Osborne’s letter says HMRC projections indicate central government will pay £400m in levy from 2017/18, while local government will pay about £300m.

Tyrie asked for specific information about the impact of the levy on the NHS.  Osborne says that Treasury analysis suggests the NHS Hospital and Community Health Service in England will have to pay around £190m.

Osborne writes: ‘However, like any other employer, the NHS will be able to draw down levy funding and get back more than they pay in the levy by taking on sufficient apprentices.’

There are currently 15,000 apprentices working in the NHS, and Osborne says the aim is to add further 100,000 by 2020. A new role, nursing associate, has been created as a an additional career pathway into nursing.

Osborne also cites a government consultation to ensure apprentices makeup more than 2.3% of the workforce in public bodies in England, including the NHS, police, fire service, schools, museums, housing associations and a range of other organisations.

This consultation, led by the Department for Business, Innovation and Skills (BIS) and the Department for Education, is seeking views on which public bodies in England should be set targets for the number of apprentices working for them.

Under the proposals, a list will be created of public sector bodies and organisations that have 250 or more employees, which will be subject to the targets and will be required to report on their progress annually. 

The consultation closes on 4 March. Details are here

Osborne’s letter is here

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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