Apprenticeship levy may hamstring employee investment

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Following the Government’s consultation on the implementation of an apprenticeship levy, the ALMR has warned that the proposals risk disrupting investment and could increase the burdens on businesses.

The ALMR has made a submission to the consultation arguing for the use of incentives, rather than a levy, to encourage investment and benefit business of all sizes.

ALMR Chief Executive Kate Nicholls said: “The Government’s proposed levy focuses on quantity, not quality and could undermine the Government’s own objectives if businesses end up paying out more than they can generate in apprenticeships. The proposed levy opts for a one size fits all approach that totally fails to consider businesses size, market, or trading style. The proposals make no reference to the potential size of the levy and which businesses will be caught by it. The Government has spoken of applying it a ‘reasonable level’ without indicating what that entails. Smaller companies may not be able to generate the large numbers of quality apprenticeships the Government is asking for.

“Our annual employment survey shows that per-employee investment in training has fallen by nearly 50% over the last year, despite a 32% increase in the number of apprenticeship starts. Falling margins have meant that non-essential training for non-apprentices has been scaled back. An additional employment levy is only likely to exacerbate this problem.

“The ALMR has repeatedly called for steps to incentivise training and apprenticeship take-up via additional funding and scrapping of employer NICs for under-25s. A tax credit regime whereby companies who make an investment have the ability to offset it against PAYE liabilities would incentivise employee investment and allow businesses to focus on addressing their own skills shortages.”



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