Apprenticeship fees halved for small businesses – what will this mean?

David Coombes: Managing Director of Skills for Logistics

If you weren’t already aware, on Monday 29th October, the Treasury announced that the 10% fee small businesses must pay when taking on apprentices will be halved. The news was received positively by the logistics sector. I spoke to our Managing Director, David Coombes, to get his thoughts on the news.

What impact do you think this reduction in fees will have on apprenticeships?

Firstly, we are delighted that the chancellor has chosen to reduce the cost of apprenticeship training for non-levy payers, with the government now committing to paying a contribution of 95% of the apprenticeship fee and the employer paying the remaining 5%. This is a major and positive shift which the industry has been pushing hard for since the levy has been introduced. This should enable training providers to work closely with smaller businesses to increase the number of apprenticeships on offer.

What impact will this have for the logistics sector?

Well, we have seen less than 10% of logistics businesses take on apprentices since the levy was introduced, it’s certainly going to encourage non-levy payers to start thinking about the real value they can gain from apprenticeships. I’m sure there will be a big change in encouraging smaller business to take on apprentices now.

What are your thoughts on the Treasury backtracking on the start date for the apprenticeship fee cut which was set to be April 2019?

I don’t understand why this has happened, the change should really be made at the start of a new financial year. April 2019 is the best possible time and with that being the mark of two years into the levy, it sends the right message. By talking about the reduction and subsequently not giving an actual date of when this will take effect, it sends mixed messages. Spreading uncertainty in this way is bad for development.

Do you think a consequence of a rumoured later start would incentivise employers to delay their apprenticeship recruitment?

By April 2019 it will be two years since the levy started. The incentive is very much to use up the pot before the end of the two years. Providing it isn’t later than the new financial year, I’m hopeful it won’t have a major impact.

As you’ve mentioned, by April 2019, it’ll be two years since the levy came into effect, do you think that this is too soon to make changes whilst it’s still very much in its infancy?

That’s been a large part of the argument to not make the change, but actually I think two years is within a good time frame. We can’t wait any longer for this change, otherwise, all the government’s targets will be missed, and the opportunity will pass. We’ve seen the slow take-up – there needs to be other incentives to improve apprenticeship starts.

What else do you think the government could be doing to incentivise people to be taking up the apprenticeships?

The apprenticeship levy is a blunt tool. Within the pot, there should be a budget for attraction or the option to spend on advice and support as there is still a lot of confusion around what the best apprenticeships are for different businesses.

Any other thoughts?

I think in the current economic climate, any additional cost to businesses is tough, but the value an organisation receives from well-trained employees can be a life-saver. It reduces staff turnover and increases productivity, meaning less waste and an improvement in job efficiency.

It was great to hear David’s thoughts, but what about you? We’d love to hear your views on this. What does this reduction in fee mean for you? Whatever your thoughts, we’d love to have a chat – Email or Tweet us now!

Sarah Gunston 5th November 2018

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