In his autumn statement, setting out the results of his annual spending review, chancellor of the exchequer George Osborne revealed that the previously announced apprenticeship levy will come into effect in April 2017, at a rate of 0.5% of an employer’s pay bill. However, a £15,000 allowance for employers will mean that the levy will only be paid on those employers with pay bills over £3m (which equates to 100 employees on an average of £30,000 a year).
With most construction companies having few employees, relative to their turnover, and relying instead on subcontracted labour, this move appears to largely remove the threat of most contractors having to pay two apprentice levies – the new national one and the long standing Construction Industry Training Board scheme. But it does not yet settle the future of the Construction Industry Training Board (CITB), which was not mentioned by the chancellor.
CITB chairman James Wates said: “While today’s announcement regarding the apprenticeship levy creates a challenging environment for CITB across Great Britain, we will continue to support industry and work with government to ensure the best possible outcome. Our next step is to engage in extensive consultation with employers and work out the most effective way to continue providing the construction industry with the skills and training it needs.”
The Chartered Institute of Building (CIOB) also voiced concern on this. Policy officer David Hawkes said: “Although we welcome the news of a further three million apprenticeship starts by 2020, shifting the emphasis on firms to train their own staff, the government must work closely alongside professional bodies and employers to design and implement high quality, robust standards that meet the needs of the construction industry. Furthermore, clarity on the role of the CITB moving forward must be made to give confidence to employers.”
For those who do have to pay the new levy, the onus will be on them to develop apprentice training programmes that will enable them to get more out of the scheme than they pay in. Such companies include many of the equipment manufacturers like JCB, Terex and Komatsu.
Rob Oliver, chief executive of the Construction Equipment Association (CEA), which represents them, said: “The confirmation that the apprenticeship levy or payroll tax will affect companies with a turnover above £3m will affect most CEA members from 2017. Our role will be to help ensure that there are sufficient relevant apprenticeship training opportunities for our sector, so that companies can turn this tax into a dividend.”