The government’s new apprenticeship levy could result in firms paying thousands of pounds extra to train construction apprentices, contractors have warned.
Civil Engineering Contractors Association said it now had “very strong concerns” about the affordability of training under the new levy, adding that the changes could “jeopardise the industry’s ability to deliver new skills in the future”.
The concerns follow Build UK and the CBI’s calls for government to delay the introduction of the levy to give firms more time to understand and prepare for it.
Details of the new levy were unveiled last Friday by the Department for Education.
Under the proposals, companies with annual wage bills that exceed £3m will have to pay 0.5 per cent into the levy fund.
Apprentice types will be banded under 15 new funding bands, with the government setting a maximum limit on what can be drawn down from the fund to pay for each type of apprenticeship.
Any money spent on apprentices above this cap will not be covered by the fund, with firms instead having to pay all of the excess costs above the cap.
What does the apprenticeship levy mean for you?
CECA has argued that the caps set for the training of construction apprentices are far lower than the costs required to develop them.
This could see firms forking out thousands extra in training costs and make apprenticeships less appealing, industry figures have warned.
Chief executive Alasdair Reisner told Construction News: “You look at the funding caps for the construction sector and these are not numbers that will excite anyone in terms of delivering apprentices.”
The new bands will see caps for roadbuilding apprentices capped at £5,000, while steelfixing apprentices will be capped at £4,000 and tunnelling operation apprentices set at £5,000.
“We have historically outperformed the sector in terms of delivery but the new arrangements could see us become one of the more challenged areas for apprenticeship provision,” Mr Reisner said.
He added: “We are carrying out urgent work to investigate whether the bands for specifically civil engineering apprenticeships are viable going forward.”
Under the proposals, SMEs will make a 10 per cent contribution to training apprentices, with the government covering 90 per cent of every apprentice trained.
Federation of Master Builders said the new funding arrangements looked “relatively favourable” to SMEs, while the Electrical Contractors Association said the government proposals were ”positive for SMEs”.
Nevertheless, the FMB did warn that it was important that the types of apprentices were placed in the right funding bands to “avoid stacking up costs for small employers”.
Under the proposals, SMEs would have to cover all of the training costs that exceed the funding cap put on that standard of apprentice.
Mr Berry told Construction News: “Our understanding is that the training costs for a typical construction level 3 apprenticeship should be more than covered by some of the upper band levels, but it will be important that they are placed in the right bands which reflect actual cost, and this will need to be monitored carefully.”
Last week Construction News reported that Build UK wanted the government to push back the intended April start until firms fully understood the changes.
Build UK policy director Simon Nathan told Construction News: “Our stance doesn’t change: we believe a delay in the introduction of the apprenticeship levy still makes sense and we are confirming this with our members.
“Reading the document, there still isn’t enough clarity and information for employers to properly assess the impact of the new levy, understand how the system works and plan for training.”
These views were echoed by the CBI, which called on education secretary Justine Greening to change the April start date to give more time for firms to prepare for the changes.
CBI director general Carolyn Fairbairn said: “Though business understands the fiscal challenges, it would be a great mistake to rush ahead before a viable scheme is ready.
“The apprenticeship levy in its current form risks turning the clock back on recent progress through poor design and rushed timescales.”
A three-week consultation period will now take place with firms and trade bodies able to respond to the proposals.
The final details for the levy will be published in October.
|Apprenticeship pathway||Level||Provisional max funding band value|
|Accessing and Rigging||2||£6,000|
|Applied Waterproof Membranes||2||£6,000|
|Built Environment and Design||3||£6,000|
|Civil Engineering for Technicians||3||£9,000|
|Construction and Building Services Management and Supervision (Sustainability)||4||£12,000|
|Construction Contracting Operations||3||£9,000|
|Construction Site Management||6||£12,000|
|Construction Site Supervision||4||£12,000|
|Decorative Finishing and Industrial Painting||2||£6,000|
|Foundation Degree in Architecture||5||£12,000|
|Foundation Degree in Built Environment||5||£12,000|
|Foundation Degree in Civil Engineering||5||£12,000|
|Foundation Degree Professional Practice in Construction Operations Management||5||£12,000|
|Geomatics Data Analysis||3||£9,000|
|Insulation and Building Treatments||2||£3,500|
|Management Quantity Surveying and Commercial Management||6||£12,000|
|Occupational Work Supervision||3||£5,000|
|Property Maintenance Operative||2||£9,000|
|Science Industry Maintenance Technician||3||£27,000|
|Specialist Concrete Occupations||2||£5,000|
|Steelfixing Occupations Major Projects||2||£9,000|
|Town Planning Technical Support||3||£9,000|
|Transport Planning Technician||3||£12,000|
|Wall and Floor Tiling||3||£9,000|
|Wall and Floor Tiling||2||£5,000|