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Scottish Government Response to the UK Government Apprenticeship Levy

Scottish Government Response to the UK Government Apprenticeship Levy

Thursday, January 5, 2017

ISBN: 9781786527257

This report sets out the Scottish Government response to the UK Government Apprenticeship Levy and sets out how Scottish Government plan to develop a distinctly Scottish approach to apprenticeships and wider skills development to drive closer engagement with industry supporting Scottish Government's efforts to enhance productivity and economic growth in 2017-18 and beyond.

Executive Summary

In July 2015 the UK Government announced its plans to introduce a UK wide Apprenticeship Levy from April 2017. Employers will pay 0.5% of their annual pay bill in excess of £3m through the PAYE system. Those with an annual pay bill of £3m or less will be exempt. The Levy will apply to employers in the public, private and third sectors.

The UK Government took this decision to introduce the levy without any prior consultation with the Scottish Government or indeed employers. While training levies and their collection are a matter reserved to the UK Government - skills policy including responsibility for apprenticeships is a fully devolved matter.

The UK Government will use the funding generated through the Levy to support its commitment to deliver apprenticeships in England during the lifetime of the current UK Parliament in addition to allocating a share of the Levy to each of the Devolved Administrations.

On 14 November 2016 the UK Government announced the Scottish Government’s settlement from the UK Apprenticeship Levy. This is set out below.

Population share of levy funding (£m)

2017-18 £221m

2018-19 £230m

2019-20 £239m

What the UK Government announcement did not make clear was that this is not £221 million of additional money for Scotland, but largely replaces what the Scottish Government would have previously received as a traditional share existing UK Departmental apprenticeship spend.

As in previous years the Scottish Government will use this funding, as part of the overall Scottish Budget, to support our extensive skills, training and employment provision, including our Modern Apprenticeship programme.

In direct response to the views of employers in Scotland, and reflecting on the Apprenticeship Levy consultation responses we received, the Scottish Government will deliver a range of interventions that further support skills, training and employment in Scotland. In particular we will:

Continue to expand the number of Modern Apprenticeship opportunities as part of our planned growth to 30,000 new starts each year by 2020 alongside an increase in the number of Graduate Level and Foundation Apprenticeships during 2017-18;

Support measures to tackle structural unemployment issues and challenge inequalities and under-representation in the labour market by supporting people who face barriers to education, training or employment, in partnership with employers, local authorities and the third sector;

Continue with the implementation of the Youth Employment Strategy: ‘Developing the Young Workforce’ specifically including the development of the network of Developing the Young Workforce Regional Groups and the delivery of employment-focused college provision for young people;

Respond to the immediate skills needs of employers, through:

o the establishment of a new Flexible Workforce Development Fund; and

o on-going and sector-specific skills support for priority sectors in the economy such as digital, care and early years.