Hundreds of business owners say they won’t take on apprentices or will train fewer young people if the government pushes a controversial new levy through.
A Black Country survey of 500 small and medium-sized businesses revealed 65 per cent will take on fewer apprentices and 55 per cent may stop taking on school-leavers altogether under the new proposals.
Training experts BCTG carried out the survey of companies across the country and discovered initially 70 per cent of firms were not even aware of the new Apprenticeship Levy, which could cost them thousands each year.
The government is introducing a new Apprenticeship Levy from April 2017, which will affect larger businesses and require smaller firms to make upfront cash payments for training.
Under government proposals, any smaller company with around 115 or fewer staff, who don’t pay the levy, will find themselves having to pay thousands of pounds up front for each apprentice they take on to cover the cost of accredited training. This is in addition to paying the Apprentice minimum wage of £3.30 per hour.
Currently apprenticeship training is free for all employers, however the government anticipates the new levy will bring up to £3 billion each year to fund apprenticeship places.
Chris Luty, BCTG director, who commissioned the survey, said under the new scheme many small companies, who provide good apprenticeships, will struggle to find the additional upfront money to pay for a 16-19-year-old’s training.
“Small and medium sized businesses can least afford this additional tax on their wages bill and they are telling us that it means they may not take on as many apprentices or maybe none at all.
“The reality is a small engineering firm, or hairdresser or plumber won’t be able to find a cash contribution of a couple of thousand pounds to pay for an apprentice’s training. They will lose out as will young people looking for jobs with proper qualifications.”
“This levy won’t hit the likes of JLR hard who in reality will always offer apprenticeship training but it will have a direct impact on businesses that are the backbone of our economy. It strikes me that it is policy formed in the Westminster bubble which won’t translate out to areas like the Black Country.”
BCTG, based in Taylors Lane, Oldbury, heads up a consortia of training providers across the Black Country, Birmingham and further afield. It carried out the survey because it says employers are simply not aware of the new proposals.
“In principal generating more income for training is a good thing,” added Mr Luty, “but the way in which this is being proposed means the circle can’t be squared. We will be lobbying the government along with other businesses, FE providers and training organisations to get them to rethink this tax on training.”
BCTG Employer Apprenticeship Levy Survey 2016
Almost 70 per cent had not heard of the Apprenticeship Levy
More than 65 per cent will employ fewer apprentices or train their staff less if they are forced to pay the levy
55 per cent of SME employers will employ fewer apprentices or stop recruiting altogether if they are required to make a cash contribution
If SME employers are required to make a cash contribution 90 per cent say they think it should be less than £500 per apprentice
Only two per cent of employers surveyed would use a college to provide apprenticeship training most would choose a local training provider
94 per cent of employers are happy with the current arrangements for apprenticeship training