Are Scottish employers losing money to the apprenticeship levy?
Whether Scottish employers have a hard deal is matter of opinion.
But here are the facts. Since the UK government brought in the apprenticeship levy in 2017, all Scottish employers with a pay bill over £3 million have had to contribute 0.5% of their annual bill into the levy. Some companies have paid thousands into the levy – but unlike their English counterparts, Scottish bosses don’t get the money in their pockets.
In England, employers can log in to their Apprenticeship Service account to access their funds and spend them on apprenticeship training.
But in Scotland, it’s not so simple. Training and apprenticeships is a devolved area, so the Scottish government can decide how they spend Scottish levy money. They’ve opted for a flexible, national approach. Instead of being transferred back to each employer, the levy funds are collected nationally. They’re then distributed to levy-paying employers via Skills Development Scotland and the Workforce Development Fund. The funds can then be used for a range of training initiatives – not just apprenticeships.
There’s been some concern in Scotland about what the levy has been spent on. It's estimated that Scottish employers contributed £221 million to the levy last year, and many employers have been left wondering where their money’s gone. But just because it’s not in their back pockets, it doesn’t mean the levy is going to waste.
The Scottish levy is still used to fund Foundation, Modern and Graduate apprenticeships. It’s just that funds are shared via Skills Development Scotland rather than spent by each individual employer. Funds are also used to support a wide range of skills, training and employment in Scotland via the Workplace Development Fund.
Unlike England where funds belong to each employer, the Scottish apprenticeship levy is spread far and wide. But this doesn’t mean employers are losing out, it means there are more opportunities for everyone – not just those working at large corporations. It also means people who require additional support or aren’t ready to complete an apprenticeship can benefit too.
The Minister for Employability and Training, Jamie Hepburn, said: ‘We have done all we can to involve employers in decisions on how the funding is spent. Our approach is much broader than in England, and that will support skills development and give the workplace more options and flexibility. This also addresses skills gaps and the training needs of employees where a full apprenticeship might not be appropriate.’
The Scottish approach doesn’t mean employers are losing out. It actually gives employers the flexibility to spend the levy how they want to. In fact, it’s England’s more structured approach that’s left employers out of pocket. English employers who haven’t spent their funds within 24 months lose what they’ve contributed. They can transfer funds to an employer of their choice, or it gets wiped from their account and allocated to someone else.
Although the apprenticeship levy was implemented in Scotland without consultation, they haven’t done too badly. The Scottish government has given Scottish employers the freedom to spend the levy on the exact training their staff needs – and what can be bad about that?