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Apprenticeship Levy: Falling at the first hurdle?


Eight months have passed since the introduction of the so-called apprenticeship levy.


Many businesses, however, are still unsure as to what it involves, and how it might affect them.


Currently, only firms with payrolls upward of £3m have access to the funding pot into which they are paying. This, of course, has excluded the many smaller firms who make up the spine of the transport sector. It was partly for the benefit of these firms that the levy was implemented.


Transport industry bodies harboured hopes that the levy would give the flagging sector a much-needed injection of youth labour. This, however, has yet to materialise.


What is the apprenticeship levy, and how does it work?


Introduced in April 2017, the scheme involved levying businesses with payrolls over £3m. Those businesses will then be able to use that money to fund their own apprenticeship schemes.


At the scheme’s inception, the government stated that around one year after the levy’s enforcement, the pool funded by the initial companies would be extended. Thereafter, the many firms that do not meet the £3m payroll threshold will gain access to it.


When this next stage is rolled out, businesses will have to register for the Digital Apprenticeship System, through which they will pay training providers to source potential candidates.apprenticeship levy causing confusion among businesses


Smaller businesses will need to pay 10% of the training costs, while the government foots the remaining 90%. This, it’s purported, will be taken from the funds paid but not used by the larger businesses.


Because of the complexity of scheme (and the lack of information emanating from the government), many businesses have been unable to spend their contributions. Recruitment specialists Skills for Logistics and Bis Henderson blame a lack of understanding among businesses. This could be due to the inadequacy of guidance distributed to the firms involved.


What do the experts say?


David Coombes, M.D. of Skills for Logistics, said:  ‘It’s been going for eight months and it’s been eight months of deliberation, consternation and confusion.”

He continued: “I can’t believe the amount of confusion and misunderstanding at large, professional organisation that employ thousands of people. About 10%-20% of all businesses are just writing it off as a tax. Around 40% are still not getting their heads around what they can do with it.

“It’s incredible how much of an impasse it is at. Organisations are not sure how to spend it and what to spend it on.”


Meanwhile, MD of Bis Henderson, Andy Kaye, commented: “There is a misconception out there that the levy is only for new members of staff. In reality, that is not the case. What the levy is capable of being used for is the upskilling and development of current staff. That’s where we feel it has probably got more benefit.”


Any business owner concerned about the apprenticeship levy is advised to undertake as much research as possible. Recruitment is an issue of increasing urgency in the road haulage sector. In addition, the lack of insight on the topic from the State is contributing to the thickening atmosphere of uncertainty in UK transport.

Going forward, an operator or transport manager would do well to look into potential solutions. Many options are available for managers who want to establish a culture of clarity in their operations.