ICAEW calls for more flexible Apprenticeship Levy

SMEs in England risk missing out on bright young talent if the Government doesn’t reform the Apprenticeship Levy, according to the ICAEW.

A-level and GCSE students received their exam results this month, and many are expected to opt for an apprenticeship rather than going to University, but despite the benefits apprentices offer there is a reluctance among SMEs to run their own apprenticeship schemes.

Iain Wright, director for business and industrial strategy at ICAEW said: “In our interactions with businesses up and down the country, we find SMEs more and more reluctant to run their own apprenticeship schemes due to the complexity of accessing levy funds and the lack of flexibility built into the scheme.

“The SME sector has traditionally been a big recruiter of 16-18 year olds for apprenticeships, so this is a concerning development which could mean that talented young people are unable to access the skills and training they need to prosper in the workplace.”

The accountancy sector has benefited significantly from apprenticeships, which have helped plug the skills gap and support growth among small practices across the country.

The benefits for non-levy paying employers are particularly attractive, with the government committed to paying 95% of its apprenticeship training costs. However, the complexities in accessing the funds are putting SMEs off from applying.

Apprenticeship Levy – what is it?

The apprenticeship levy was introduced in April 2017 after being announced in the 2015 summer budger, with the aim of training three million new apprentices in England by 2020, to develop vocational skills, and to increase the quality and number of apprenticeships in the UK.

The levy applies to businesses with an annual payroll over £3 million, and therefore is paid by less than 2% of UK employers.

It is charged at a rate of 0.5% of an employer’s payroll, with each receiving an allowance of £15,000 to offset against their levy payment.

Those with payrolls under £3m are not required to pay into the left, and instead rely on leftover funding after largest employers have reclaimed their entitlement.

SMEs are not guaranteed success when they apply to access funds, with a recent report from the Association of Employment and Learning Providers (AELP) finding that nearly one in four (24%) of apprenticeship training providers had to turn away prospective SME employers and apprentices over a lack of funding.

Wright added: “ICAEW calls on the Government to  simplify  the Levy and build greater flexibility into the apprenticeship programme to encourage more SMEs to take on apprentices. This will make it easier for businesses across all sectors to provide young people with the opportunity to learn while they earn or develop their skills on-the-job.”

Apprenticeships are a way for people to get the training they need whist working, with the hope of securing a career without incurring thousands of pounds of student debt. Businesses also benefit as they can train apprentices with the skills that the business needs for the future.

John Aslam, managing director and founder of Fusion Chartered Accountants, an ICAEW member, said: “All of our trainees study the ACA qualification on the Level 7 Accountancy Professional Apprenticeship. One of the main reasons for choosing this training route was that, in addition to the qualification, the apprenticeship gives students more structured training compared to the firm’s internal training.”

Young people can begin their accountancy qualification after they have finished their A-levels, and recruiting school levers gives businesses a wide pool of potential talent to draw from.