Apprenticeship levy 'must not be a new tax'

London - In the UK, business lobby group the CBI has called for the level of the proposed apprenticeship levy to be set by an independent board and warned that it must not be seen as a way of taxing businesses.

The UK government has set a target of creating three million apprenticeships in the life of the current parliament, and while businesses have welcomed the move they have baulked at the cost of the proposed employer-led approach, which some observers believe will cost in the region of £2bn.

Details of how much large companies will have to pay have yet to be published, while small firms are excluded from having to cough up cash.

The CBI, in its response to a government consultation, said that since some previous attempts at introducing a levy had been unsuccessful, proving costly to firms and failing to tackle skill shortages, the levy would need to be proportionate, so as not to put employers off from taking on apprentices and meeting the government’s ambitious target.

Sarah Glendinning, regional director of the employers’ organisation’s North East branch, said the business community was committed to working with the government to tackle the skills gap, but there was a danger the levy could undermine the system, not strengthen it.

“A new levy won’t be welcomed by business, so we want to see a new politically independent Levy Board setting the rate based on clear evidence, with the funds ring-fenced,” she said.

The CBI was calling for the levy to be simple and to give employers real control, she added, “uniting standards and funding in one body. We believe that a payroll-based levy would need to be significantly lower than 0.5% of total payroll to be affordable.

“CBI members are clear that if the levy is set too high, firms won’t be able to deliver the significant amount of training necessary to get more apprenticeship funding back than they put in. That risks less money being available for firms to invest in other forms of training and a reduction in apprenticeship opportunities.”

Businesses, Glendinning said, needed to be reassured that a levy was not just a new tax; all funds must therefore be ring-fenced and protected.

“We must ensure this does not become a box-ticking exercise aimed at simply boosting numbers, without any real thought to the quality of experience for apprentices and firms.

“Employers have a critical role in boosting UK skills, but to do this they need real control. If business is paying, politicians must let go of the reins.”