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Concerns over apprenticeship levy plans

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Fleet workshops that employ apprentices could be forced into changing their training schemes as uncertainty builds around the apprenticeship levy, which comes into force in April 2017.

The levy is a 0.5% payroll tax applicable to all public and private employers with a salary bill exceeding £3 million per year. A business can benefit from the tax by reclaiming its payments against apprentice training or assessment. Employers that use in-house training or self-funded schemes would need to switch to an approved trainer or risk losing out financially.

A new online portal will show how much a company has paid in each month and how much they have available to spend. The Government will top-up accounts by 10% but any unspent funds will be taken back after 18 months.

Employers can choose the training and assessments they feel best suits their needs from a list of registered training courses and providers. The new training standards are setup by employer-led groups known as ‘trailblazers’.

Overall, the Government will have final say over what training will be approved for each apprenticeship type and states that it must be delivered by an external company.

Steve Thomson, head of transport for West Yorkshire Police, expressed concern over the future of his apprentice scheme, saying: “Our in-house apprentice model is different to many and works on a four-year plan using on-the-job training; we will have to look at changing it or face further costs.”

Carolyn Fairburn, director of the CBI, thinks that the levy will put employers’ own training schemes at risk.

“The levy misunderstands training only as apprenticeships, which will force firms to change existing training in order to comply,” she said. Her fear is that large employers will stop funding successful in-house schemes as they need to free-up cash to pay the levy.

But FTA skills policy manager Sally Guilson pointed out that companies already using external training providers should be able to reclaim the costs through the new system.

She said: “Most businesses in the transport industry are already geared up with apprenticeship partners in place; they should be able to get back what they pay in.”

However, it will be down to the company rather than the provider to manage costs from now on.

IMI chief executive Steve Nash said most businesses operating more than 100 vehicles will have to pay the new levy.

“Employers will have to accept the levy as an additional tax,” he said. “If they want to make the most of the money they pay in then they should look to develop apprenticeship schemes with similar businesses.” 

Under the trailblazer scheme, similar employers can come together to develop their own apprenticeship standards in partnership with training providers such as colleges.

If a business can’t find suitable external training, it may be forced to self-fund future schemes which, combined with levy payments, will cause significant cost increases.

BT Fleet provides its scheme through a partnership with Warwick Trident College. 

It should be able to use its levy fund to pay for the training but still fears there is a lack of information. HR director Stephen Webb said: “We are still waiting for definitive detail.”

Any business that takes on Apprentices before April 2017 can still receive full funding under the old system. However, they will be required to make levy payments if eligible.

The Government will contribute towards training costs for non-levy paying companies – although the level of contribution has not yet been announced.

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