The Treasury has thrown the start date into doubt for when the 10-per-cent fee that small businesses pay when they take on apprentices will be halved.
Chancellor Philip Hammond announced yesterday during his Budget speech that SMEs will only have to contribute 5 per cent to the training of their apprentices, as part of further reforms to the levy.
Later, when asked by FE Week, a Treasury spokesperson said the policy change would be from April 2019. However, he has today said this was a “misunderstanding”.
“Further details will be set out soon, including dates,” he added.
It is understood that the start date for 5 per cent contributions will be decided on by the Education and Skills Funding Agency.
When FE Week reported that the change would come into effect from April, many in the sector raised concerns because it would encourage employers to delay starts.
The halving of the co-investment rate for SMEs is intended to engage more employers in apprenticeships – though surely some risk that it will also encourage others to delay their recruitment until the changes come into effect in April 2019 #Budget2018
— Dr Fiona Aldridge (@FionaAldridge) October 29, 2018
They’ve clearly written off the next 5 months. No doubt they’ll turn a blind eye when struggling app providers struggle even further!
— Barbs (@barbs_paul) October 29, 2018
The change follows Mr Hammond’s announcement at the Conservative Party Conference earlier this month that the annual apprenticeship levy transfer facility will rise from 10 to 25 per cent from April 2019.
He said he will also consult with businesses about further changes to the levy from 2020, following the slow take up and employer criticisms.
Deciding on the implementation date is really tricky if the current disastrous starts numbers falling even further is to be avoided. Given the shambles of the situation we currently have concerning new starts, this must be the most important consideration at this time. The start date for the employer reduction in their contribution must therefore be immediately implemented if this is to be avoided. The ESFA can change the match funding to 95% behind the scenes from this date onwards. Come on ESFA step up to the plate and show us it can be done!