Apprenticeship tax credits

Apprenticeship tax credits

Download your free copy of the FE Week 16-page special report on the PAYE proposal in the government’s apprenticeship funding consultation, sponsored by Pearson.

Click here to download (10mb)

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Introduction

Time has been called on a consultation into the most radical reform proposals for apprenticeship funding in generations.

The government have confirmed around 350 responses from across the FE skills sector have entered the ring, contributing their views on three possible models for future funding arrangements, which the government hopes will attract more employers to the apprenticeships programme.

The first was a model of direct payment to the employer, the second would allow employers to claim back spending on apprentices through tax credits, and the third would leave funding in the hands of training providers.

Allowing firms to claim back costs through the Pay As You Earn (PAYE) system was always going to be the most divisive option.

It was clear from the moment this was proposed through former Dragon’s Den investor Doug Richard’s review, in December last year, that we might have a split decision.

That is why we decided to focus this week’s 16 page hard-hitting supplement on the fight of the 21st century — at least

in the FE world — over tax credits proposals.

It’s the option FE Week understands has the support of Skills Minister Matthew Hancock, although he was unable to comment while the results of the consultation, which closed on Tuesday, October 1, were still being compiled.

But acting as referee, FE Week has drawn together here some ‘fors’ and ‘againsts’ in debate over use of the PAYE system.

So, seconds out, round one — and in the “red” anti-PAYE corner we have training providers worried about losing control of finances, and organisations representing small businesses, who fear it will put small and medium-sized enterprises off taking on trainees, because of possible added paperwork.

However, there are also several big hitters in the “green” pro-tax credits corner, including the Confederation of British Industry, which insists the simplicity and familiarity of PAYE would attract more businesses to apprenticeships.

The funding model the government eventually settles on will be a key factor influencing the fate of cross-party efforts to drive apprenticeships to new heights.