Further to our recent article on the apprenticeship levy, the Chancellor of the Exchequer has just announced in his Spring Statement that he is bringing forward the apprenticeship reform package that he announced in last years autumn Budget. Accordingly, the apprenticeship reform package will now come into effect a year early on the 1st April 2019.
Apprenticeship Reform Package
Under the apprenticeship reform package, the following measures will be brought in a year early:-
- Small and medium-sized enterprises (SME's) contributions in terms of the co-investment rate will drop from 10% to 5%. It is estimated that the fact that SME's will now only have to contribute 5 per cent to the training of their apprentices, will save them £695 million collectively on an annual basis.
- The amount that organisations can transfer of their apprenticeship levy entitlement to another organisation in their supply chain will increase from 10% to 25%
Reaction
Philip Hammond, the Chancellor, stated in relation to the apprenticeship reform package that: "We’re committed to returning technical and vocational skills to the heart of our educational system with the new T-level system on track to deliver the first three routes in 2020; the first phase of the National Retraining Scheme starting this summer; and the apprenticeship programme rolling out 3 million new high-quality apprenticeships."
However, others were more critical. For instance, Jane Gratton, Head of Skills at the British Chamber of Commerce, stated: "We have spent months pushing ministers to make practical changes to the way the apprenticeship system works, and this is an important step in the right direction. Reducing the co-investment costs for employers will encourage more firms to take on new talent, and train and upskill their wider workforce. But the inflexibility of the apprenticeship levy means there’s still not enough training taking place in businesses, and this will hamper efforts to boost productivity. We’re unlikely to see training volumes increase until there is significant reform of the system."
Other Announcements In the Spring Statement
As well the announcement on the apprenticeship reform package, the Chancellor announced that "the government has appointed Professor Arindrajit Dube to undertake a review of the latest international evidence on the impact of minimum wages, to inform future National Living Wage policy after 2020."
