On 21 August 2015 BIS published a consultation on the Government’s proposal to introduce an Apprenticeship Levy.  The consultation focuses on the implementation of the levy, more details on rates and scope will follow later this year.  The introduction of the levy could act as a ‘game changer’ for Higher Apprenticeship and Degree Apprenticeship and ‘larger employers in England will be able to spend the levy to support all of their post-16 apprenticeships’.  We therefore understand that employers will be able to reclaim the levy when they spend on Higher Apprenticeship and Degree Apprenticeship.  Smaller employers may also be able to benefit from funds collected through the levy (this is subject to consultation).

HEIs will wish to note:

• The levy is designed to tackle the under investment by employers in skills and the negative impact this has on productivity
• The levy is being introduced to help fund the target for 3 million apprenticeship starts this Parliament
• The levy will apply to both public and private sector large employers and will apply to all sectors
• The levy will be calculated on the basis of employee earnings and will be collected through the PAYE system
• Employers committed to apprenticeship will be able to get more back than they pay through the levy through a ‘top-up’ system through the proposed digital Apprenticeship voucher scheme which puts purchasing in the hand of the employer – more details will be published in the Autumn
• Issues raised in the consultation include; whether the levy should be used to support apprenticeship training by smaller businesses, inspection/approval of training providers that receive levy funding to pay for apprenticeship training as well as more ‘operational’ matters.

The abolition from April 2016 of National Insurance contributions for apprentices under the age of 25 provides a further incentive for employers to engage in apprenticeship.

UVAC will be producing a response to the consultation.