The government is committed to creating three million apprenticeships by 2020 and intends to impose a compulsory apprenticeship levy on all UK companies in 2017 to fund an expansion in training and apprenticeships.
However, companies in the construction and engineering construction industries already pay training levies. The government has launched a consultation on its apprentice levy plan and seeks views on how this might impact the construction industry.
Construction Industry Training Board (CTB) director of policy Steve Radley said: “These proposals will undoubtedly have implications for the existing construction industry levy, run by CITB on behalf of industry. Ultimately, it will be for construction employers and federations to decide what type of funding and support system is needed to achieve the sector’s full potential on skills, growth and productivity.”
The last consultation with construction employers on whether they wanted to continue to pay the levy concluded as recently as October 2014. The new levy orders, based on this consultation, were laid before Parliament on 16 January 2015 and came into effect in March 2015. These run until March 2018.
As the government’s new apprenticeship levy will be across the whole economy, larger employers in the construction and engineering construction industries face having to pay two separate levies, which might seem hard to justify. “On that basis government and the industries need to decide how best the existing levy arrangements respond to the apprenticeship levy,” the consultation paper1 states.
It says: “One option is for employers in the construction and engineering construction industries to pay the apprenticeship levy whilst continuing to pay the existing industry levy. If this were to happen we would expect companies in the industries to fund their apprenticeships using the apprenticeship levy.
“Another option is to potentially remove the statutory industry levy arrangements completely, so that employers only pay the apprenticeship levy. This would represent a significant change to training arrangements in the construction and engineering construction industries and we would need to understand what effects this would have on the skills and capabilities of the UK construction industry.
“The Construction Industry Training Board and Engineering Construction Industry Training Board will consult with employers before the introduction of the apprenticeship levy on whether they should continue to pay the industry levy.”
In addition to all this, from 1st September 2015, all bids for government contracts worth more than £10m must demonstrate their commitment to apprenticeships.
Alex Meikle, director of employment and skills at the Electrical Contractors Association (ECA), said: "We recognise the pressing need for the whole of industry to get behind the drive to increase apprenticeships. Much detail remains to be worked up but we are supportive of a levy on employers and hope this will support those who currently invest to continue and incentivise those who do not engage with apprenticeships to begin to do so."
However, Civil Engineering Contractors Association chief executive Alasdair Reisner expressed reservations. "Over the past few years, the construction industry has been playing its part in providing high quality jobs and training for young people,” he said. “This is reflected in our most recent research which shows a 50% increase in the number of CECA member companies recruiting apprentices over the past three years, with the number of apprentices recruited increasing by 91%. Furthermore, our members forecast a further 25% increase in apprentice recruitment in the coming 12 months.
"Given this success we are concerned about the impact of the proposed UK-wide levy to fund apprenticeships. While our industry is familiar with the concept of levy-payment, we struggle to see to how these proposals will work alongside the existing CITB levy which funds training and development across a wide range of activities for both new recruits and up-skilling of the existing workforce."
1. The Apprenticeship Levy consultation can be found at www.gov.uk/government/uploads/system/uploads/attachment_data/file/455101/bis-15-477-apprenticeships-levy-consultation.pdf and closes on 2nd October 2015.