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Companies 'not ready' for new tax

Employers urge government to delay apprenticeship levy

Carolyn FairbairnEmployers have urged the government to delay introducing the Apprenticeship Levy or risk damaging rather than raising the quality of training.

Business group the CBI says it supports investment in this area but believes the planned levy suffers from poor design.

It says employers and not in a position to introduce it next April as planned.

The levy, a 0.5% payroll tax on all employers with an annual wage bill above £3 million, is designed to address a chronic skills shortages, but has drawn criticism from businesses since it was announced by Chancellor George Osborne in 2015.

CBI Director-General, Carolyn Fairbairn, today said: “We welcome the Government’s focus on growing investment in apprenticeships, and business stands ready to step up and increase its own commitment.

“However, the Apprenticeship Levy in its current form risks turning the clock back on recent progress through poor design and rushed timescales.

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“Without a radical rethink it could damage not raise training quality. This really matters because of the crucial importance of closing the skills gap to improving the UK’s lagging productivity.”

Ms Fairbairn said the “fundamental problems” remain and added: “The Government must take time to get this right, and listen properly to the concerns and ideas of the businesses who will be doing their best to make it work.  

“The Levy is too narrowly defined. It covers only one type of training and employers can only reclaim off-the-job costs. As a result, valuable forms of training risk being cut back, with quantity put ahead of quality.

“The April 2017 start date will not give firms sufficient time to prepare, so we urge the Government to delay implementation. Though business understands the fiscal challenges, it would be a great mistake to rush ahead before a viable scheme is ready. 

“We urge the new Secretary of State to take a step back from the political timetable and consider what is best for building the skills of our young people, to enable the UK to become a high-skilled, high-productivity economy. Business stands ready to work with Government to build a system that delivers for the future and from the outset.”

The Scottish Retail Consortium also expressed concerns over the levy. Director David Lonsdale said there was “still a dearth of information and clarity” over the tax, not least how it might apply in Scotland.

“Indeed, we feel in light of Brexit that there is a strong case for pausing its implementation at UK level,” he said.

“The Scottish economy as a whole does need to become more skilled, efficient, and productive to compete.

“However, retailers have a strong record on training and career progression, with many providing a wide range of apprenticeships in diverse areas such as logistics, warehousing and food preparation alongside many other accredited or job related qualifications.

“We have been encouraged by commitments and willingness from Scottish Ministers to engage with the industry on this matter. However it is imperative that levy-paying employers in Scotland are not only able to directly access the funds for their own broader skills needs but are at the heart of designing how the funds from the levy will be utilised to aid productivity and growth.”

 

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