The Apprenticeship Levy scheme should be relaxed to help get young people into work, say leading audit, tax and business advisory firm, Blick Rothenberg.
Andrew Sanford, a Partner at the firm, said that on Thursday “18-year-olds get their A Level results. But those looking for apprenticeships may be more nervous than most, as the rigidity of the Apprenticeship Levy scheme has discouraged businesses from providing them.”
He added, “The Apprenticeship Levy was established in 2017 to help and encourage employers to take on apprentices. A levy of 0.5% of wages was applied to payrolls greater than £3million, to be used by all employers who had appropriate qualifying apprenticeship training. But if the levy was not used within 2 years by a paying employer, the funds expire. Studies in 2022 indicated that over £3 billion of levy funds were expired at that date, representing an additional tax take for the government.
“The funds were likely unused because of the strict requirements of how much ‘off the job’ training apprentices must do, reducing the working hours they can do for their employer. The funds also cannot be used for travel expenses, despite the fact that for many young people, affording the costs of getting to their place of work is a big hurdle.
“It was always intended that the levy would be used for training and not general taxation. While the public purse is tight, some relaxation of the rigidity of the scheme, to allow easier access to levy funding for struggling sectors such as retail and hospitality, would be welcome.
“The recent increases in Employers National Insurance Contributions (NIC) and living wage, while not directly affecting take home pay, made the costs of employing lower paid employees disproportionately higher. The decrease in the starter band to £9,100 to £5,000 for Employers NIC being the principal driver.
“Relaxing the restrictions on the levy would make the on cost of employing new entrants to the market lower and ultimately encourage employment opportunities in a difficult market.”
