The Problem with the Apprenticeship Levy

Last month we took a look at the Apprenticeship Levy and the advantages this will have for employers. However, it won’t benefit everyone, and as claims have emerged regarding the negative effects the Levy promises to have on smaller council schools, Sussex Business Times investigates…

In January’s issue, Sussex Business Times took a detailed look at the Apprenticeship Levy and the benefits this scheme is likely to have on businesses across the country. Just to recap, the Apprenticeship Levy is a new government initiative, which was announced during the 2015 Summer Budget and will be applied to businesses in all industries – including schools – across the country, where control of apprenticeship funding will be put into the hands of employers through the Digital Apprenticeship Service. This levy will charge employers 0.5% of their paybill, but only if the salary bill is in excess of £3 million. Employers with a salary bill of less than this will not have to pay the Levy, which will be effective on and after 6^th April 2017.

Last time, we outlined the many benefits the introduction of the Levy will have on businesses in the UK, and while, to employers as well as hopeful apprentices it may seem like a no-negative scheme, it is clear to see that it does have its downfalls, especially in other areas of UK education – small council-run schools in particular, who will have to pay the new Apprenticeship Levy, while non-local authority schools will be exempt.

The Local Government Association (LGA) represents over 350 councils in England and Wales, and argues that any school with a wage bill of less than £3 million should be exempt from paying the Levy, claiming that council-maintained schools are being treated unfairly in comparison to academies, especially considering how stretched these schools’ budgets are currently. The LGA estimates that the introduction of the Levy will affect up to more than 2.5 million students at 9,000 council-run schools with wage bills under £3 million. This is because, where a school is maintained by the council, its staff contribute to the overall wage bill of the council rather than being counted separately. This means that the Apprenticeship Levy is applied to them and will need to be accounted for in school budgets from April 2017, while free standing academies will not.

Chair of the LGA’s children and young people board, Richard Watts has urged the government to level the playing field for schools, explaining how it is no secret that many schools are struggling with their funding, yet once again, council-maintained schools are being dealt a poor hand compared to academies.

He said: “It is discriminatory for small council-maintained schools not to be exempted from the apprenticeship levy in the same way that small academies and faith schools will be. They will be forced to find additional money to pay the levy, while an academy or faith school with an identical wage bill can invest that money in making sure their pupils get an excellent education.”

Kevin Courtney, who is the general Secretary of the National Union of Teachers, has also explained that the Government should ensure the Levy does not have to come from school budgets, or at least put additional funding in place to pay for it. He previously commented: “It is still wholly unclear how the Levy will be collected from community schools, which do not use LA payroll services, or how voluntary aided schools, which do not use LA payroll services will have their exemption protected. If the Levy does not have to be paid from any school or academy budget, then the government should increase their funding to compensate.” He continued: “However, as we now know, 98% of schools face real terms cuts between now and 2020. Schools cannot afford yet more cuts in funding, especially cuts which fall as capriciously as these!”

The NAHT (National Association of Head Teachers) has backed the LGA’s and National Union of Teachers’ opinions, with the organisation’s General Secretary, Russell Hobby stating: “School budgets are already being pushed beyond breaking point. Figures released by the National Audit Office last year show that school funding is being cut by £3 billion in real terms – destroying the government’s claims that school budgets are protected.” He then went on to explain that, when the National Funding Formula was announced last year, the Government promised that no school would lose more than 1.5% of its budget, but the introduction of the Apprenticeship Levy will cause council-maintained schools of any size to lose a further 0.5% of their staff budget, which is already stretched.

In addition to this, the NAHT is also calling for the Government to unearth newt training and apprenticeship schemes that schools can access and can too benefit from, using the apprenticeship funding that will be gathered together thanks to the Levy.

Backing up this suggestion, Apprenticeship and Skills Minister, Robert Halfon believes that the Apprenticeship Levy will boost the UK’s economic productivity, while increasing the country’s skills base and giving millions a step on the ladder of opportunity. He concluded: “In the majority of cases, local authorities will be responsible for paying the Levy in the community schools they maintain, rather than the schools themselves. We expect these schools to have full access to funding for apprenticeship training and will support all employers, including schools and local authorities, in using Levy funds to invest in quality apprenticeships.”