Published: 00:04, 24 February 2017
The apprenticeship levy is unfair on businesses and a “blunt instrument” which many companies still do not understand, according to business leaders.
The levy is designed to force more large firms to hire apprentices by charging them a 0.5% tax on their wage bill, which they can only recover if they use the money to pay for apprenticeships or improving the skills of current staff.
The measure only applies to companies which pay staff more than £3 million but many firms remain unprepared.
The government will introduce its flagship policy on April 6 – although it will not affect courses until May 1 – but providers say lots of businesses are still unaware of the reforms.
Tracy Searle, head of business development at East Kent College, said: “These are the biggest reforms that have ever happened to apprenticeships and it worries me that when we visit new employers they don’t know what the levy is or about the reforms.
“Companies have got to realise we have until May when this changes.
“We are working hard to make sure when we go across we have everything in place to pass onto employers. We are trying to give out as much information as we can.
“These are the biggest reforms that have ever happened to apprenticeships and it worries me that when we visit new employers they don’t know what the levy is or about the reforms..." - Tracy Searle, East Kent College
“We need to make the transition as painless as possible. All we can do is keep everyone up to date.”
Medway Council has 46 apprenticeships under the levy and aims to have 70.
Council leader Cllr Alan Jarrett said the levy penalises organisations that already employ apprentices.
He said: “The problem with legislative changes is they are inevitably a blunt instrument and don’t take into account local needs.
“We have an academy doing lots for apprenticeships but the government says we have to got to do more. It is starting from a point that we are not doing anything but we are.
“We were already ahead of the game. We have not set a budget for the levy yet. I’m not sure if the levy is helpful.
"I don’t think it’s fair. It’s another chunk of money being taken away. It’s just another burden we have to carry.”
Kent County Council leader Cllr Paul Carter was more optimistic about the prospects from the levy.
“It’s good news for business,” he said. “It’s good for young people, good for Kent businesses because we are training more young people and advancing the training of existing staff.
“The task now is how do we help those who pay the levy through the system to make sure they get as much of their contribution back to the new people in their business.”
Mark Lumsdon-Taylor, deputy chief executive and principal of college operator the Hadlow Group, agreed with the mission to get more companies to hire apprentices but claimed the levy itself is unfair on firms.
He said: “They are doing it because the government wants to see businesses taking on more apprenticeships. There is no easy way of implementing a process like this.
“From the business’ perspective, the government has effectively created a tax to take on additional staff. These are additional costs businesses have to bear.
“If the government wants more young people engaged in apprenticeships I think it is fair. The government wouldn’t have done this if businesses were taking on apprenticeships in the first place.
“But it is not fair for a business which has to re-manage its payroll and costs because of an extra 0.5% cost on the payroll. Then the person that loses is the consumer at the end.”
The KM Group is launching the Kick Start Kent campaign aimed at creating a better environment for employers to hire apprentices and for people to start a career using the route.
The campaign was first run three years ago, when it led to 88 employers hiring an apprentice in the county, and is returning to champion apprenticeships again.
Its key focuses are:
The government set itself a target of getting three million people to start apprenticeships by 2020 but this figure is worthless unless people are finishing the courses and benefiting the economy. What can be done to improve completion rates?
Are measure like the apprenticeship levy being correctly and fairly administered and improving the environment for apprenticeships?
Are schools, colleges and parents making students aware of the option?
Every morning at 10am we play you an hour of tunes from the 90s. We call it, #WeLoveThe90s.
Play 'Say It' with Garry and Laura on kmfm Breakfast and you could win £1,000!
Wake up to kmfm Breakfast with Garry and Laura - it's Kent's alarm call.