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Apprenticeship levy: Ministers urged to consider major changes

Civils contractors and MPs have urged the government to consider major changes to its apprenticeship levy, which comes into effect this week.

The government’s economy-wide apprenticeship levy will see all companies with a PAYE bill above £3m pay 0.5 per cent of anything above that level into the government apprenticeship levy fund from next month.

This is aside from the payments of 0.5 per cent of PAYE bills made by qualifying construction firms to the CITB.

A report from the cross-party sub-committee on Education, Skills and the Economy last week warned the cross-industry Apprenticeship Levy was “a blunt tool”.

“Contributions are unlikely to bear any relation to the skills needs of individual employers and their sector more generally,” the study said.

“We recommend that the government, as part of its continuing review of the operation of the levy, consider whether a single rate is the best approach and explore ways of restructuring the levy on a sectoral and regional basis.”

Meanwhile the Civil Engineering Contractors Association said firms should have the right to use vouchers from the scheme towards training of existing workers, and that multiple vouchers should be eligible towards one apprenticeship.

CECA director of external affairs Marie-Claude Hemming said the proposed levy would be “extremely challenging” for many civils firms.

“We are therefore calling on the government to consult with the construction industry as a matter of urgency, to ensure the levy is implemented in such a way that allows our sector to invest in skills through different qualifications and training methods applicable to their specific needs,” she said.

“CECA is seriously concerned about the potentially negative impact the levy will have on the quality of apprenticeships, existing apprenticeship programmes, and wider skills development.”

CECA chief executive Alasdair Reisner said the greatest challenge facing the infrastructure sector was upskilling its existing workforce. He said vouchers received through the scheme could ultimately be made more effective in achieving this.

“Once the scheme has bedded in, it may be time to look at making it work better for construction, and we may want to consider then what vouchers can be used for,” he said.

He added that the levy could be inefficient if each voucher could only be used towards one apprenticeship, meaning employers were ultimately left to make yet another payment to top-up to the full value of a course. 

“Firms may not use these vouchers if they do not cover the cost of a construction apprenticeship,” he warned.

However, Mr Reisner said the industry had to look to maximise the benefits of paying the two skills taxes within the framework set out before challenging it.

The Department for Education was contacted for comment.

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