New research from the British Chambers of Commerce (BCC) has revealed that more than one in three businesses have not heard of the apprenticeship levy.
The BCC is calling on the government to communicate better with businesses about the apprenticeship funding reforms, which will affect businesses with a pay bill that exceeds £3 million a year.
Announced during the 2015 Summer Budget, the levy will be charged at a rate of 0.5 per cent of an employer’s total payroll and employers will receive an annual allowance of £15,000 to offset against their levy payment. It will be introduced on 6 April 2017.
Around 39 per cent of businesses questioned by the BCC were unaware of how the apprenticeship levy operated, according to the study, while more than half (51 per cent) did not understand how the levy worked above or below the £3 million pay bill threshold.
Only 11 per cent said the reforms would increase their recruitment of apprentices, while just 5 per cent of businesses said they will have a positive impact on their wider training budget.
This is despite 30 per cent of those polled in the study falling under the scope of the levy, of which only 26 per cent expected to recover all or more of their levy payment.
Marcus Mason, head of education and skills at the BCC, said: “The government needs to ensure that businesses understand how they could benefit from the reforms, because if it just feels like yet another tax then the policy will have failed.
“Devolved administrations also need to provide a guarantee that the money raised is ring-fenced and kept for training.
“The government should allow businesses to use the levy funding to support other high-quality workplace training or there is a risk of displacing other valid forms of training. Fundamentally, treating apprenticeships as a numbers game would benefit neither businesses nor apprentices themselves.”
The BCC survey of 1,600 business leaders across the UK was conducted in association with Middlesex University.