How will the Apprenticeship Levy affect Northern Ireland, Scotland and Wales?

 5 April 2016

I was recently asked by a key Scottish stakeholder, “With regards to the imminent Apprenticeship Levy, the information is very focused on England, do you know what the situation will be in Scotland?” The answer is that no-one is certain of the impact, either for large organisations or small creative businesses. But here’s what we do know.

There appears to be full agreement on the value of apprentices, but not on how training should be funded and delivered. Image: Simon Mills
There appears to be full agreement on the value of apprentices, but not on how training should be funded and delivered. Image: Simon Mills

What standards will be used?

In England, the conversations are gathering pace and go hand-in-hand with the development of the new Trailblazer apprenticeship standards. Businesses are now expected to create their own training standards to replace the current apprenticeship frameworks, and will then access support for that training through the Apprenticeship Levy. 

But what of Northern Ireland, Scotland and Wales, where the ‘Trailblazers’ approach has little if any support? The Devolved Administrations (DAs) still place a high value on National Occupational Standards (NOS) which have been developed in partnership with industry to define levels of competence and underpin apprenticeships.

Understandably, the Skills Departments in the respective DAs are reluctant to move away from qualifications which are both rigorous and occupationally relevant. 

How might the Levy’s funding be distributed?

How then, will the Apprenticeship Levy translate into Northern Ireland, Scotland and Wales?

We are faced with a situation where ‘Skills’ is a devolved responsibility and very different in each nation, but where the Levy is being mandated and implemented by Westminster Government. The Chancellor’s 2015 Autumn Statement estimated that by 2019-20 the Levy will raise £3bn and that £0.5 billion of this will be allocated across Scotland, Wales and Northern Ireland.

This implies the Barnett formula will be the method of distribution and that the governments in these countries will decide how the funds are spent, but there is no confirmation of this yet.

Skills Ministers in Northern Ireland, Scotland and Wales are in agreement regarding their concern for the Levy. In particular, its potential to undermine their respective apprenticeship policies and negatively impact employers.

Love it or loathe it, the Apprenticeship Levy and target of 3 million apprentices is here to stay. 

It has been well-documented that a meeting took place on the 4 February between Skills Ministers from Northern Ireland, Scotland, Wales and Nick Boles to discuss these concerns and call for increased transparency as to how the Levy will implemented.

In relation to this meeting, NI Employment and Learning Minister, Dr Stephen Farry said:

“Along with my Ministerial colleagues from Scotland and Wales I am concerned that the imposition of the Apprenticeship Levy could have unintended consequences for the Devolved Administrations. This Levy will be a further tax burden on large businesses and this could impact negatively on the UK’s and Northern Ireland’s ability to compete globally and to attract new business. The Northern Ireland System of Apprenticeships is very much based on a quality model... There is no intention to change the model that exists in Northern Ireland.”

His colleague’s comments from Scotland and Wales echoed a similar message. Love it or loathe it, the Apprenticeship Levy and target of 3 million apprentices is here to stay. It has at least united political parties in their support of apprentices and work-based learning. There appears to be full agreement on the value of apprentices, but most certainly not on how apprenticeship training should be funded and delivered.

The impact on small creative businesses

While recognising the concern about the Levy being a tax burden for large businesses, my concern is for the micro-businesses.

78 per cent of businesses in the creative and cultural sector fall into this category. For business with a small number of staff, it can be a courageous leap to take on an apprentice, even with the advantages that it brings.

An aspect of the Levy that needs to be urgently addressed is what measures will Government put in place to ensure that apprenticeships won’t just become a game for the ‘big boys’. If the majority of our employers are excluded from accessing the benefits of the Apprenticeship Levy, it would see a significant step backwards in the creative and cultural industries.

Take a look at our new publication on apprenticeships


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