The Budget also included a rise in the employment allowance and the introduction of a National Living Wage.
Osborne said that three million new apprenticeships will be created by 2020, funded by a levy on large employers. The levy will support all post-16 apprenticeships in England. It will provide funding that each employer can use to meet their individual needs. The funding will be directly controlled by employers via the digital apprenticeships voucher, and firms that are committed to training will be able to get back more than they put in. There will be formal engagement with business on the implementation of the levy, which will also consider the interaction with existing sector levy boards. Further details will be set out at the Spending Review.
The Chartered Institute of Building (CIOB) responded: “The government has set itself an ambitious target of delivering three million apprenticeships over the next five years – equivalent to six hundred thousand new apprenticeships a year. The introduction of a new apprenticeship levy is a big ask for business, but one that recognises the acute skills shortages industries such as construction will face in the future unless significant investment is made in training. And if the government is to deliver on its ambitions, more needs to be done to promote construction as a viable career path.”
Other employment announcements included a rise in the employment allowance and the introduction of a National Living Wage.
“Whilst the National Living Wage is unlikely to directly affect many well-remunerated construction operatives, the impact on organisations with large FM operations could be significant,” said Simon Rawlinson, head of strategic research at EC Harris, part of Arcadis. “Less dramatic, but hugely important for the construction industry are plans to reform the funding of apprenticeships. Breaking the link between employer funding and access to apprentice training could be a big boost to construction, where so many small businesses struggle to fund and then hold onto their trainees. Many sub-contractors are likely to benefit from the arrangement and will be incentivised to take on more trainees. However, it is the large businesses that will pay and if the levy is charged on turnover, then this could become a significant extra business cost for large contractors – even though they will be indirect beneficiaries of a larger and better skilled workforce.
Businesses will have their employer National Insurance bill cut by another £1,000 from April 2016, as the Employment Allowance rises from £2,000 to £3,000. The Employment Allowance gives businesses and charities a cut in the employer National Insurance they pay. CIOB responded: “The CIOB welcomes the rise in employment allowance to £3,000, which will allow small firms to employ four people on the national living wage without paying any national insurance.
From April 2016, a new National Living Wage of £7.20 an hour for the over 25s will be introduced. This will rise to over £9 an hour by 2020. CIOB said: “The introduction of the National Living Wage is another promising addition, and the CIOB now asks whether the government should go further and increase the minimum wage for apprentices, which is likely to improve the appeal for individuals considering this route into industry.”
With an upsurge in the economy, the CIOB is predicting greater employment opportunities within construction, which already accounts for 10% of the total workforce.
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