Productivity Boosts and the Apprenticeship Levy

HFE Tutor with student
Tutor with student

On the back of the recent summer budget, the Government has launched a detailed “productivity plan”. This 15-point, 88-page document focuses on long-term investment and promoting a dynamic economy. Announced by business secretary Sajid Javid, he claimed that GDP would increase by 31% if the UK could match the US in terms of productivity.

Intrinsic to achieving this jump in productivity are apprenticeships – a word that seems to be on everyone’s lips. On several occasions, we’ve explored how beneficial it can be to have an apprentice on your books. Now more than ever, the Government are attempting to dramatically increase apprentices’ contribution to businesses, and subsequently the wider economy. Contained within the 15-point plan is a section devoted to this very idea.

Several steps are outlined in the document, including: introducing employer-routed funding reforms, placing control of funding directly into hands of employers; abolishing employer NICs (National Insurance Contribution) for almost all apprentices under the age of 25 from April 2016; and the forthcoming move to give apprenticeships the same legal treatment as degrees.

Also included in the plan is the introduction of a levy on large UK employers in order to fund new apprenticeships. In Germany, Denmark, and Switzerland, as well as 50 other countries, what the Government deem as “high quality apprenticeship systems” are already in place, and levies have been used to fund them. The levy is designed to support all post-16 apprenticeships, and there are intensives for larger organisations in England, who will be able to claim more money back than they put in, providing they employ a sufficient number of apprentices.

Adding his thoughts to the recent apprenticeship discussions was former Labour transport sectary and minister for schools, Andrew Adonis. While it’s certainly not applicable to the apprenticeship programmes we provide, he did cite that in other sectors “apprenticeships are barely worth the name, lasting only a few months and leading to no worthwhile qualifications”. Unfortunately, it seems that the poor quality of apprenticeships in other industries is at risk of tarnishing the innovative work in health and fitness. He ends his article with a call to implement these new apprenticeship reforms straight away, rather than wait until 2020, the Government’s current target.

As more and more press time gets devoted to apprenticeships, it seems the push to increase productivity and strengthen the UK’s skills base is only going to grow stronger. For young people looking for apprenticeships or employers looking to partner with a training provider, it seems the coming months and years are going to be very critical.

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