The new levy requires all employers with an annual pay bill of over £3m a year to pay 0.5% of their pay bill into a new fund. Employers will then be able to draw on the fund to pay for apprenticeship training for their staff. The fund is expected to reach £2.8bn. The government aims to have 3m apprenticeships in England by 2020.

In February, recruitment giant Randstad’s CEO called the levy “complete and utter madness”, a sentiment echoed today by ARC external policy adviser Ben Grove, who this morning said ARC believes, in its current form, the levy penalises supply agencies.

“They will not be able to take advantage of all the funds paid on their payroll, as the majority of supplied staff do not work directly for the agency but for a client. Therefore, in its current form, ARC believes the levy is disproportionate, unfair and threatens to distort the way recruitment supply agencies operate.

“We understand that the government appreciates the impact that the levy will have on the supply sector in contrast to other employers, but nevertheless has given no indication that it intends to make any change.

“The current plans omit any provision for recovery of the levy charge from any third party and consequently places agencies in potential conflict with hirers, who may not want to pay it, and workers, who will not want to take a pay cut. At the same time agency workers will generally be ineligible for apprenticeships as they are all temporary supplied workers, and as such are prejudiced.

“We have asked the Treasury that measures for supply chains to share the levy funds be fast-tracked to ensure that agencies’ funds are not wasted. We have proposed a way in which this could be achieved and have asked the Treasury to give our suggestions due consideration.

“ARC members do not object to payment of the levy in principle and support the objective of the government policy on creating new apprenticeships. However, ARC maintains that the scheme would work better if the conflicts were removed and agencies can legitimately charge the hirer for the levy applicable to agency worker payroll. Hirers can then access the agency worker levy funds.

“Under ARC’s proposal, agencies would continue to pay the levy on their regular employee payroll, and be entitled to the levy-free allowance as for other employers, so removing the current unfairness. ARC believes this change would meet original government intention and would benefit all. Our campaign is for this change.”

Also commenting on the levy’s introduction, Karen Jones, HR director at housebuilder Redrow, welcomed the government’s recognition of the need to focus on grassroots recruitment through a number of avenues, with the introduction of the levy directly increasing the number of businesses growing apprentice numbers across the UK. 

“Technical skillsets, in particular in sectors such as construction, engineering and health and social care, are vital to the strength of UK plc but are currently in short supply, so this policy represents a significant step in the right direction.

“The impetus to increase take-up, however, can’t be led by government alone; now is the time for greater collaboration and industries with skills shortages should unite to better promote the benefits to young people of undertaking apprenticeships, and pursuing a career, in their respective areas. There is also work to be done in terms of schools and a coherent careers education policy. We surveyed 1,000 young people earlier this year, revealing that a third have never received information at school on apprenticeships.

“The Apprenticeship Levy should be viewed as one element of an holistic strategy and we need better collaboration on best practice within industry, as well as improved resourcing and information for schools to encourage children down a technical career path where appropriate. The introduction and future focus on T-levels is therefore welcome.

“Although the emphasis of the government to date has been on apprenticeship starts, we must move to placing an equal emphasis on measuring and reporting on completions across all sectors and the quality of the training provided, as observed by the Commons Sub-Committee on Education, Skills and the Economy. We agree that only through measurement, particularly of attrition rates, can we inform future strategies effectively.”

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