The new government apprenticeship levy. Are we already seeing its effects?
Monday, 27 November 2017
As of April 2017, the Government introduced a new apprenticeship levy, which required employers with a wage bill of more than £3 million to contribute 0.5% of their payroll into the levy. The idea behind the scheme was that this would increase the number of people training at work. More information on the apprenticeship levy can be found here.
However, last week the BBC reported on the fall in the number of workers starting apprenticeships and suggested that the levy is to blame for the 59% drop. The article confirms that there is a perceived shortage of skilled workers, and the recently reported statistics are likely to strengthen that perception, but little has been said about the potential effects the levy may have on the employers themselves. MHA Larking Gowen’s Insolvency & Recovery department has seen these effects on a first-hand basis, having recently been appointed Administrators of local apprenticeship provider Norfolk Training Services Limited (“NTS”).
The significant reductions in government funding for apprenticeships meant that it was no longer viable for NTS to continue trading. Despite considering various options, they were unable to avoid entering an insolvency process, which ultimately led to the closure of its three training sites across Norfolk.
The closure of NTS has affected the community both socially and financially. However, MHA Larking Gowen has been able to assist the Government, who is responsible for the reallocation of NTS’ 400+ apprentices to a new training provider.
In light of the reported statistics, and examples such as NTS, it raises the question of whether the levy will not only fail to achieve its objective of stimulating investment in staff training but whether it will also cause additional financial problems for smaller businesses. Unfortunately, it really is a matter of ‘time will tell’ but, hopefully, local businesses will manage to navigate the potential pitfalls that this new legislation appears to have created.