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Briefings

Member update on the Apprenticeship Levy and CITB

Date: 02/06/16

Update on the Apprenticeship Levy and CITB

This note is to provide members with an update on thinking about how the introduction of the new Apprenticeship Levy can be managed alongside the operation of the existing CITB Levy.

Background

The Government’s new Apprenticeship Levy (AL) will commence from next April, and all companies with a payroll over £3m will need to pay it at 0.5% on their pay bill above that figure. 

In England these employers will be able to use the money raised by the AL as vouchers towards the cost of apprenticeship training through digital accounts that will be created for them. In Scotland and Wales, decisions are still awaited from their newly elected governments on how the funds raised by the AL will be used.

The government will not exempt employers who already pay the CITB Levy from the AL.  So CITB wants to work with employers to look at how any potential future CITB Levy would sit alongside the AL. As this is a complex issue, employers have said that CITB should provide the time to have a meaningful consultation on future arrangements.

Current thinking and proposed way forward   

Given the importance and complexity of getting future arrangements right, CITB has agreed with government that it does not, as originally proposed, need to accelerate the timetable for the required three yearly Consensus consultation with industry on the future of its own Levy. It will therefore stick to the original timetable for this, which will see formal Consultation on the CITB Levy start in January 2017 on a potential new 2018 Levy Order. By then we will have the full details of the Apprenticeship Levy and CITB will have set out its offer to the industry, including having agreed with us, and you, how it will modernise the Grants Scheme.  

HBF has been speaking regularly with CITB about this set of issues over the past few months. We think a full consultation on the future of the CITB Levy is essential and that this needs to be undertaken with full knowledge of the detailed plans for implementing the AL and a full understanding of how CITB is to change to meet industry requirements in the future. We will be updating you regularly to this end and seeking your views on emerging proposals for change.

As any potential future CITB Levy would not commence until 2018, it is proposed that there will be a one-year ‘transition’ package from April 2017, when the Apprenticeship Levy comes in to force.  The objective of this package will be to provide enhanced CITB Grant support on their training activity for one year to employers who are required to pay the AL in order to mitigate the burden of paying both Levies in 2017/18.  

CITB is currently considering possible options for a transition package and we will let you have further details of the proposed way ahead in due course. In the meantime, we would assure members that the transition package would not affect the CITB Grant support available to firms not paying the AL - as the package will be funded through CITB efficiency savings and reserves.

John Slaughter, Director of External Affiars