The British Chambers of Commerce (BCC) has warned that the new apprenticeship levy, due to come into effect in April 2017, will slow down hiring rates among big employers.
The levy will apply to all firms with a pay bill of over £3m and will be 0.5% of the total employee earnings, payable through the PAYE system. An allowance of £15,000 per annum will be made, recoverable on a monthly basis.
The government’s aim of 3 million apprenticeships in 2020 has been welcomed, however business leaders are wary of the levy.
Adam Marshall of the BCC said:
“Businesses are telling us that uncertainty around the apprenticeship levy is having an impact on them, both on their profits and on their training offers.”
While the BCC is overwhelmingly in favour of apprenticeships it fears the government focus is too much on a numerical target rather than the development of high levels of skills.
A large majority of the training carried out in the UK is not as part of an apprenticeship scheme. As companies wait for full details of future funding they are holding back from investing in training in anticipation of the levy and to see what will be classified as an apprenticeship.
There is also concern that the quality of apprenticeships will suffer, as firms try to label existing training as an apprenticeship to secure funding.