Government plans to create a new all-sector apprenticeship fee could do more harm than good for the construction industry, according to concerns expressed by BSRIA.
It’s anticipated that the new apprenticeship levy will go into effect in April 2017, and the government is presently soliciting input on the following topics:
- Paying the levy
- How the levy should work for employers who operate across the entire of the UK
- How to make sure that employers paying the levy have the potential to get more out than they put in
- How best to give employers control of apprenticeships
In its submission, BSRIA has voiced concerns over the new levy’s impact on the present system in place for the construction industry, which already pays a statutory fee to the Construction Industry Training Board (CITB) (CITB). For starters, it claims that its members are “in the dark” about whether or not they must pay both the current construction-only charge and the new industry-wide fee, and it also warns that the reorganisation could “kill off” the CITB completely.
According to BSRIA CEO, Julia Evans, “quality apprenticeships are crucial for our industry to help grow the economy, supply the skills that businesses need, and give millions more hardworking people financial security and hope for the future. Strong economies need skilled workers to compete in today’s global marketplace. We hope that our members don’t have to pay such levies twice over and that the future of the CITB is safe – especially given the training it provides is dedicated to the construction sector.
“Another concern is the impact of the levy on the SME (small and medium enterprises) where most apprenticeships are situated. Given that 99.9 percent of construction companies are SMEs, the future and livelihood of their apprentices could be under peril if larger enterprises resist contributing towards this new charge, smaller businesses will definitely feel the pinch. Workers in our business have reason to be concerned about the future.
The Government’s consultation document notes that the apprenticeship tax would be economy wide and larger companies in the construction and engineering construction industries will be in scope of the levy alongside all other larger firms in the UK economy.
On that basis government and the industry need to consider how best the existing levy arrangements respond to the apprenticeship levy.
One option is for employers in the construction and engineering construction industries to pay the new apprenticeship levy while continuing to pay the existing industry levy and if this were to happen, the CITB would expect companies in the industries to fund their apprenticeships using the apprenticeship levy, according to BSRIA.
As an alternative, firms could be required to pay only the apprenticeship tax by eliminating the statutory industry levies altogether. This would represent a “significant” shift to training arrangements in the construction and engineering construction industries and CITB would need to investigate what implications this would have on the skills and capacities of the UK construction industry.
Both the CITB and the Engineering Construction Industry Training Board will consult with employers before the introduction of the apprenticeship tax on whether they should continue to pay the industry levy.
To meet the government’s pledge to support three million apprenticeships by 2020, this move includes a requirement to consider an employer’s apprenticeship offer when awarding large government contracts and the publication of new industry standards to ensure that apprentices have the skills that companies require..