Construction and the Apprenticeship Levy

Construction and the Apprenticeship Levy

What is the Apprenticeship Levy?

The Apprenticeship Levy, which came into effect on 6th April this year, is a payment that HMRC will collect from large employers in both public and private sectors that have a payroll of over £3,000,000.  The Government has committed to three million apprenticeship placements by 2020, and the levy has been put in place to ensure that this commitment is fulfilled and that gaps within the UK workforce are plugged with a skilled labour force.

How much is the Levy?

The Levy is 0.5% of a company’s payroll, and every contributing employer will get a £15,000 allowance to offset against their contribution. All payments that go into a company’s digital Levy account will be topped up with a 10% contribution from the Government. The funds accrued in this account are to be used to pay for apprenticeship training and assessments up to the funding band maximum for that particular apprenticeship. Employers have two years from their initial levy payments made in April this year, to draw down funds.

Who can provide Apprenticeship Levy training?

A register of Government approved Apprenticeship Training Providers has been published and is compiled of main providers, employer providers and supporting providers. Some larger organisations that pay the Apprenticeship Levy register as employer providers so that they can deliver the training that their company needs to plug their own skills gaps. To spend the funds in your digital Apprenticeship account, you need to first find a training provider, agree a fee and payment scheduled for the training and once the training has started, monthly payments will be taken from your account and sent to your training provider.

What is the construction industry doing about the Apprenticeship Levy?

Well, it would seem that the construction industry has been a bit slow in picking up the pace in regards to the new levy. Some employers view the levy as an additional tax, while others are simply failing to get to grips with it. It is, after all, a minefield for employers who have not taken the apprenticeship route as yet, and there is plenty to get your head around in regards to what you offer and how it is managed. But the construction industry needs to sit up and take notice of their skills shortage gap and see this levy as an opportunity because it is, with doubt, an industry that needs to find its next generation of skilled labour. With an anticipated 400,000 workers presently employed in construction due to retire in the next ten years and a potential restriction on EU labour, the construction industry could be facing a workforce shortage of skilled labour which this new Apprenticeship Levy could go a long way to bolster.

What are the benefits of the Apprenticeship Levy to the Construction Industry?

Rewind 30-40 years and the majority of young workers in the construction industry started as an apprentice, with many of those then 16 year-olds holding senior management positions today. The construction industry saw a way of taking young, enthusiastic men and women and training them in a specific skill that not only suited the company’s needs but also taught them about the company’s ethos, values, and vision. Not only did this mean employers gained a home-grown skilled workforce, they also bought loyalty and commitment from their employees. Looking to the future of Apprenticeships in construction, this is a way for companies to take the next generation and help them to carve out their careers in a way that fits in with the company requirements, and potentially buying employee loyalty. A well-trained, motivated and enthusiastic employee who is given opportunities, training and support will not need to look further afield than their own employer for them to forge a long-term career.  The Levy payments cannot be avoided, so this is the ideal time for companies to use this payment to their long-term advantage and really grow a bright, committed, skilled workforce that can carry their company through into the next phase of their progression.

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