Spring statement: Chancellor will review apprenticeship levy

The government will review the apprenticeship levy to check it incentivises investment "in the right kind of training" according to the spring statement.

The government will review the apprenticeship levy to check it incentivises investment "in the right kind of training" according to the spring statement.

23 Mar 2022, 13:15

More from this author

Rishi Sunak has announced that he will review the apprenticeship levy.

In his spring statement today, the chancellor said a review of the apprenticeship levy will be part of a new Treasury tax plan, which will be finalised in the autumn. 

“We lag international peers in adult technical skills. Just 18 per cent of 25-64 hold vocational qualifications, a third lower than the OECD average,” he told the House of Commons.

“And UK employers spend just half the European average on training their employees

“So we will consider whether the current tax system including the operation of the apprenticeship levy is doing enough to incentivise businesses to invest in the right kinds of training.”

Treasury documents published just after Sunak’s speech outlines the government’s new ‘Tax Plan‘. The plan has four themes; cost of living, capital, people and ideas.

Under ‘people’, the Treasury states that “the government is increasing skills funding significantly over the parliament. We want businesses to do the same.”

Calls for flexibilities of the apprenticeship levy have come from employer representatives for years, with various sectors wanting to use funds for other training courses and associated apprenticeship costs like travel and wages.

The Treasury appear to have heard calls for reform. In the main spring statement document, it states: “The government recognises that employers have frustrations with the way that these apprenticeship levy funds can be spent within the apprenticeships system and is delivering a suite of improvements to address these.

“As part of this, the government is looking at how more flexible apprenticeship training models can be supported, while ensuring apprenticeships remain a high-quality training route for employees of all ages and stages of their career.”

Skills sector bodies however have warned against going too far in providing employers with greater levy flexibilities.

Responding to today’s announcement, the chief executive of the Association of Employment and Learning Providers, Jane Hickie, said: “We would strongly advise that levy funding should remain ring fenced for training and assessment only.

“We look forward to seeing more details about the government’s plans to boost training investment and productivity rates by reforming the apprenticeship levy. Like everybody else, employers and training providers face rising costs over the coming months. Training providers will be disappointed there is little in today’s statement that offers the support they need.”

And speaking at yesterday’s FE Week Annual Apprenticeship Conferece, Association of Colleges boss David Hughes said it would be an “unmitigated disaster” to add radical flexibilities to the levy.

“The funding in the apprenticeship levy is for apprenticeship training, not for things like wage subsidies,” he said.

“I think it could be a really dangerous line to go down. In my view the levy is a tax to pay for training that leads to apprenticeships, it’s really simple. We shouldn’t let it be spent on other things.”

Tom Bewick, the chief executive of the Federation of Awarding Bodies, said the review of the levy was the “most welcome” in today’s spring statement.

“The brutal fact is that this payroll tax, levied on just 2 per cent of British companies, has not delivered on its original policy goals because we have fewer people and companies, overall, engaged in apprenticeships than we did in prior to 2017,” he said.

“We look forward therefore to making positive proposals to the government of how to improve the operation of the levy, but crucially, to bring an end to the decline in employer investment in training which has halved over the past decade.”

Latest education roles from

Head of Health & Safety Operations

Head of Health & Safety Operations

Capital City College Group

Head of Welfare and Student Finance

Head of Welfare and Student Finance

Capital City College Group

Chief People Officer and Director of People and Organisational Development – West London College

Chief People Officer and Director of People and Organisational Development – West London College

FEA

Chief Executive Officer

Chief Executive Officer

Wave Multi Academy Trust

Sponsored posts

Sponsored post

Stronger learners start with supported educators

Further Education (FE) and skills professionals show up every day to change lives. They problem-solve, multi-task and can carry...

Advertorial
Sponsored post

Preparing learners for work, not just exams: the case for skills-led learning

As further education (FE) continues to adapt to shifting labour markets, digital transformation and widening participation agendas, providers are...

Advertorial
Sponsored post

How Eduqas GCSE English Language is turning the page on ‘I’m never going to pass’

“A lot of learners come to us thinking ‘I’m rubbish at English, and I’m never going to pass’,” says...

Advertorial
Sponsored post

Fragmentation in FE: tackling the problem of disjointed tech, with OneAdvanced Education

Further education has always been a place where people make complexity work through dedication and ingenuity. Colleges and apprenticeship...

Advertorial

More from this theme

Apprenticeships, Colleges

Welsh college pulls plug on England apprenticeships

Leaders want to 'concentrate expertise' in Wales following latest Ofsted criticism

Billy Camden
Apprenticeships, Higher education

University hit by seven-figure apprenticeship clawback

Leaders claim to have rectified all ‘legacy’ issues and repaid government

Anviksha Patel
Apprenticeships

Grants launched to jumpstart early years degree apprenticeships

Ministers hope apprentices will start in Autumn

Josh Mellor
Apprenticeships

Management apprenticeships on the chopping block, minister confirms

Government gears up to tell employers which apprenticeships 'aren't appropriate for public funding'

Billy Camden

Your thoughts

Leave a Reply

Your email address will not be published. Required fields are marked *