Spring Statement 2019: apprenticeship levy reforms brought forward

In his Spring Statement, the Chancellor announced that reforms to the apprenticeship levy, announced at Budget 2018, will be brought forward a year and will now take place from 1 April 2019

The government will introduce a package of reforms to the apprenticeship levy to strengthen the role of employers, including providing up to £240m to halve the co-investment rate for apprenticeship training to 5%.

Other reforms include raising the amount of the apprentice levy that larger companies can transfer to smaller firms in their supply chain from 10% to 25%.

A further £5m was announced for the Institute for Apprenticeships to introduce new standards and updating existing ones so that more courses can be offered – meaning more choice for those considering their training options. The government will discontinue the old frameworks so that all new apprenticeships will be on the same higher-quality standards by the start of the 2020/21 academic year.

The levy was introduced on 6 April 2017 to increase the number of people training at work by imposing a 0.5% tax on UK employers with payroll costs in excess of £3m. Businesses with 50 or more staff now have to find 10% of the cost of training and also release staff for a day a week of off-site training.

In 2017-18 apprenticeship levy-paying employers only accessed £191m of an available £2.2bn in levy funds and government top-ups, despite these funds expiring after two years.

According to the National Audit Office’s (NAO) report on the apprenticeship programme, £2bn in apprenticeship levy payments were collected in 2017-18 but employers are failing to access these funds.

The number of apprenticeships starts dropped 26% between 2015/16 and 2017/18, with 375,800 new apprentices in 2017/18.

The NAO states that government is ‘very unlikely to meet its target of three million apprenticeship starts by 2020’. This is due to the number of starts falling after April 2017, when employers and training providers could use the previous payment arrangements. Since then numbers have not recovered.

To meet the March 2020 target, the rate of starts would need to double for the remainder of the period.

NAO report: The apprenticeships programme is here. 

Report by Amy Austin

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