Government warned about 'disastrous' apprenticeship levy

The impact of the Government's apprenticeship levy on employers has been "disastrous", according to a business leader.

Dame Judith Hackitt, who chairs the EEF manufacturers' group, said the levy was "complex", companies were unable to access their funds and many view it as just another tax on business.

Addressing the annual dinner of the EEF in London on Tuesday evening, attended by Business Secretary Greg Clark, Dame Judith will say that many companies have postponed or even halted apprenticeships because of the levy.

"A win-win has become a lose-lose. Some employers are near breaking point and Government must now listen to what EEF has long said and rethink the entire system from top to bottom."

The measure was introduced last April, making employers with an annual pay bill of £3 million contribute 0.5% of their payroll towards a levy, which can be claimed back to fund training for new or existing employees.

Business groups have been voicing mounting concerns about the levy, with firms saying they struggled to comprehend how the system was meant to work.

Figures last month showed there were 114,000 apprenticeship starts for the first quarter of the 2017-18 academic year, compared with 155,600 for the same period in the previous academic year.

Dame Judith will add in her speech that business needs urgent clarity on any Brexit transition deal and wants the Government to avoid new trade barriers or complex customs arrangements.

"We are not asking for a seat at the negotiating table but we must have a place in the wings providing up to the minute input as negotiations proceed.

"At the same time, access to people with the right skills is critical for companies.

"Government must lead on making the public case that while industry recognises broader public concerns over immigration, companies still need access to the skills at all levels which EU workers currently provide and which cannot be backfilled easily in the short or medium term," she will say.

Anne Milton, Minister of State for Skills and Apprenticeships, is understood to be keen to hear Dame Judith's concerns in detail.

A Department for Education spokesperson said: "Our apprenticeship reforms, the largest ever made by government, have been designed to encourage employer investment in quality training and put funding for apprenticeships on a sustainable footing in the future.

"We continue to engage with employers to help them plan and grow their apprenticeship programmes so they can use their apprenticeship levy effectively - working for industry and supporting productivity across the country.

"We are listening to their feedback constantly to make sure the levy is right."

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