Apprenticeship levy is a 'taxing issue' for manufacturers

MORE than a third of manufacturers see no benefits from the Government's new apprenticeship levy, which goes live next month, according to a new report from EEF, the manufacturers' organisation.

Friday, 3rd March 2017, 5:00 am
Updated Friday, 24th March 2017, 10:44 am
Terry Scouler

Three quarters of the firms surveyed by the EEF are worried that they won’t get back what they put in to the levy, and 61 per cent are concerned about the levy’s cost.

A quarter of manufacturers believe the levy will increase the quality of apprenticeships – a quarter also think it could attract more young people into apprenticeships, according to the EEF report, which has been produced with Lloyds Bank Commercial Banking.

The EEF is calling for an independent employer-led review of the implementation and roll-out of the levy by the end of 2018, because the group is concerned about its viability and long-term sustainability.

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An EEF spokesman said: “Manufacturers have warmed to some of the benefits of the new apprenticeship levy, but still have grave reservations about its viability and longer-term sustainability..

“With the levy about to be rolled out in April, over a third of manufacturers (34 per cent) still claim to see no benefits to the scheme at all. The report warns that it is being viewed by many as simply a tax on business and, worryingly, predicts that even more manufacturers will potentially fall into scope than previously expected.”

Terry Scuoler, the chief executive of EEF, said: “Despite much hard work and dialogue with Government, we are on the cusp of a policy rollout that continues to cause manufacturers great concern.

“Clearly the apprenticeship levy has the potential to bring benefits, but not enough to outweigh our sector’s reservations. With skills such a high priority these fears are entirely understandable and must be swiftly addressed.

“This report confirms that the apprenticeship levy remains a work-in-progress and must be treated as such - it requires further refining and we would urge the Government to continue to engage with business in order to make some much-needed improvements.

“Amongst a range of recommendations, we want the Government to commit to an independent employer-led review of the implementation and roll-out of the levy by the end of 2018. This will be vital if this policy is to become fit-for-purpose and to ensure its viability and sustainability.”

Dave Atkinson, the UK head of manufacturing at Lloyds Bank Commercial Banking, said: “Apprenticeships have a vital role to play in securing the skills businesses need to drive productivity and growth while also ensuring young people are given every opportunity to develop a fulfilling and rewarding career.

“Manufacturers are firmly behind this and have a long track record of providing high quality apprenticeship opportunities that lead to long-term careers, very often with the same employer.

“It’s important that the apprenticeship levy builds on this by supporting manufacturers’ training ambitions and acting as an enabler so that many more feel able to offer these valuable and aspirational roles.”

Research was undertaken by EEF between November 23 and December 9 2016 among 114 senior company executives in the manufacturing and engineering sector.

A Department for Education spokesman said: “The apprenticeship levy will boost our economic productivity, increase the country’s skills base and give millions a step up on the ladder of opportunity.

“Thanks to the levy, £2.5 billion will be invested in apprenticeships by 2019-20, double the amount spent in 2010-11. The Devolved Administrations will receive £460 million by 2019-20.

“Quality is at the heart of all of our apprenticeship reforms. We have introduced new apprenticeship standards which are developed by employers themselves and rigorously checked and taken steps to protect the term apprenticeship from misuse helping us to achieve our target of 3 million apprenticeship starts by 2020 and providing excellent value for money.”