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The Apprenticeship Levy – not just for the unemployed?

Apprenticeships have been in the headlines a lot following the Autumn Statement this year.

Bekah Leonard
15th February 2016
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With George Osborne’s plans for an apprenticeship levy, it looks like they’ll be growing in popularity over the next few years too. But what exactly is the apprenticeship levy, and who will it benefit – if anyone?

The levy won’t be introduced until April 2017 at a rate of 0.5 per cent of an employer’s pay bill. The hope is that this will deliver three million new apprenticeships starting in 2020.

Fewer than two per cent of UK employers will be paying the levy, and only on pay bills of more than £3 million.

According to the government, the levy will have raised £3 billion by 2020 to be spent on apprenticeships. This will be protected within England’s departmental spending budgets, so it won’t be spent on anything else by accident.

The employers who provide apprenticeship training will receive a ‘top-up’ to their digital accounts and all employers who aren’t paying the levy still have access to government support for their apprentices. According to the government, if the employer doesn’t use all of their allocated funds it’ll be made more widely available for other apprenticeships.

Many businesses are unhappy with the levy, unsure about how it will work long term and the effect it will have on different sized companies. Simon Walker, Director General of the Institute of Directors, said the levy can only be described as ‘a new payroll tax.’

Despite this, you can’t help but realise that companies will be getting this money back. Of course some companies will be paying more and others less, but they could be earning their money back in more ways than one.

By allocating a specific amount of funds that can only be spent on apprentices, the government is encouraging businesses to make use of the money they essentially contributed as part of the levy.  In order to make some of that money back, they’ll have to make use of it by training apprentices.

This will inevitably lead to more apprenticeships created across the country in different fields, offering young people another fantastic alternative to university. Currently, apprenticeships are available in plumbing, electrical work and other manual labour. What many people don’t realise is that you can do an apprenticeship in law, accounting, journalism, sport, health, business administration and so much more. Maybe if there were more of these available, people wouldn’t be surprised at the vast range of apprenticeship opportunities and instead would regard them as respected routes into particular careers.

 It isn’t just young people who we believe will benefit from the apprenticeship levy. Companies will find they get a lot out of it too, despite their initial worries. An apprenticeship programme involves a company training someone in a particular field, on the job. One of the major benefits to doing this is that the company are then left with an employee that is trained up and is perfect for the employer’s needs. Although an apprentice isn’t always obliged to stay on after the programme is over and the employer doesn’t always hire them afterwards, many companies do. They’re left with an employee they trained themselves to meet their standard of work and who has been shaped specifically for a job role. It comes as no surprise that when a company has hard working, skilled, and well trained employers, they are likely to benefit economically.

The levy may have seemed like an additional tax that benefits the government more than the employers. However, I truly believe that young people across the UK will find that apprenticeship programmes can open new doors to careers they might not have considered before. Just because university wasn’t right for them doesn’t mean people should not be able to achieve the career of their dreams. As well as this, by 2020, employers will find they have a team of young, ambitious and hardworking apprentices that can only do great things for growing companies. 

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