£200m Levy shortfall with hit SMEs hardest – AELP » SMEInsider

£200m Levy shortfall with hit SMEs hardest – AELP

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The estimated yield derived from the Apprentice Levy has been revised downwards, according to reports in FE Week. According to the paper, revised government estimates show that the expected yield from the levy had dropped from £3bn to around £2.8bn over the next five years.

And the Association of Employment and Learning Providers (AELP) voiced its disappointment that “The government hasn’t given assurances today that a minimum fixed budget will be allocated to non-levy payers for the next 5 years irrespective of how much money is left for them in the levy pot.

“The impact of the shortfall may be felt disproportionately by smaller businesses, the AELP said. “The announcement of the levy over 12 months ago has resulted in an increased commitment from large employers to offer more apprenticeship opportunities but uncertainty has surrounded the level of government funding that will be available for apprenticeships in non-levy paying smaller employers.   Currently SMEs provide more than half of the 905,000 apprenticeships in the country.”

“A cause for concern”

The statement went on, “We need to ensure that much needed apprenticeship places will be available to young people in towns and rural areas where large levy paying employers aren’t operating.  The Statement included a reduction in the expected levy yield of up to £200m by 2019-2020 compared to the £2.97bn estimate by the OBR in its policy costs for the 2015 Autumn Statement.  This gives us cause for concern about how much funding will be allocated overall.   It is also the second downgrade that we have seen in the OBR’s forecast figures since the levy was announced in July 2015.”

‘Given the need before June to improve productivity and social mobility, the EU referendum result shouldn’t have been a consideration in protecting budgets for skills,” said AELP CEO Mark Dawe. “But there is no doubt that the likely ending of the free movement of labour has sharpened minds in addressing Britain’s post-Brexit employment challenges.  Today’s announcements have been relatively quiet on this front but we hope to see more in the Industrial Strategy.  The Strategy  should underline the difference that properly funded apprenticeships and other high quality training can make to the productivity agenda and training providers with links to over 340,000 employers are ready to play their part.’