By Bryan Buchan, Chief executive, Scottish Engineering
In 2015, the then Chancellor, George Osborne considered a scheme to improve the number of apprenticeships being taken up and funded throughout the UK.
During 2016, he devised the means of financing this project.
His plan was to introduce an Apprentice Levy of 0.5 per cent on companies whose total annual wage bill was greater than £3 million and have it paid direct to HMRC. The money would also help smaller companies to take on apprentices without having to shoulder the full burden of financing them.
By April of this year the framework for this worthwhile venture was in place and the funds started flowing in to the HMRC coffers. One of the strategic points of the levy was that in England all of the money would be ring-fenced for funding apprentices.
Throughout England, companies who were involved in paying into the fund were registered and found themselves with an apprentice account. They would receive levy funds via an electronic voucher system, which was fully defined last year. One other key differential between England and Scotland is the 10 per cent top-up provided for employers by the Westminster Government (effectively meaning that £100 of expense attracts £110 of funding) which is not applied in the devolved areas. In England, companies have direct control of payments to their training providers, allowing them to exert influence over the nature, quality and range of courses offered.
The cash for the scheme was being collected from the whole of the UK by HMRC but Scotland, Northern Ireland and Wales, having their own parliaments, have devolved control of their education systems which include colleges and practical training centres.
While the scheme in England was rolling out successfully and with the approval of the companies involved, there were questions asked and very few answers given to Scottish companies, particularly in the engineering manufacturing sector where the cost of training an apprentice is quite considerable.
A number of Scottish companies involved in the levy which have English counterparts discovered that the Scottish Government was not prepared with a clearly defined system, such as that referenced above.
In point of fact, the Scottish parliament will receive the Apprentice Levy money as part of the Barnett formula payments, not all of which will pass exclusively to apprentice funding. Funding will apparently be supplemented by an additional £10m, and this, together with a proportion of the total take, will be diverted to non-apprentice workforce development funds, aimed at upskilling existing staff.
The danger here is that the levy money may be lost in the general spending pot in Scotland and may not be directly used on educating young people in their chosen career.
The Scottish Parliament were initially aggrieved because they felt that the UK Government should have consulted them before setting the scheme in motion. However, they have since produced a definitive response which includes a number of related areas they consider will benefit from the additional funds. They have not included any further benefits to match the UK Government’s 10 per cent bonus.
The Scottish Apprenticeship Advisory Board and in particular the Employer Engagement Group is an effort to engage with employers and the administrators from within Skills Development Scotland and elsewhere, to oversee appropriate use of funds, and it is very much to be hoped that this will prove effective.
As the support group for the engineering sector, we felt that as the money was collected to improve the apprenticeship uptake, it should have been ring-fenced for that purpose.
One of our key concerns is that employers must see a benefit from the levy and that the process of bringing young people into our sector through apprenticeships is encouraged to the full.
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