Apprentice levy is a tax on business

THE apprenticeship levy, a compulsory tax that employers have to pay, is designed to improve out skills base.

For the young, it is a method of getting qualifications in a given skill while being paid and starting a working life without incurring the burden of heavy debt.

Only employers with a wage bill of £3 million a year have to fork out, but there is a feeling that it will not be long before Government reduces this threshold to companies with 50 employees or more. The snag here is that such an imposition would not encourage expansion.

The current bill is 0.5 per cent of payroll cost, quite a burden in an age of very tight margins.

But the Government is extremely sluggish in responding to applications for grants. At a rough estimate, the levy has seen industry part with some £2 billion so far, but only a tiny fraction has been returned.

So difficult is it to get any money at all, that there is a feeling that Government has imposed a stealth tax on businesses in general.

It is always difficult to extract money out of Government at the best of times, for the forms that have to be completed are fiendishly difficult to understand and comply with.

Only just over five per cent of the apprenticeship levy so far collected has been handed out in grants, so it is easy to understand that the business community has a justifiable gripe.

I am much in favour of apprenticeships, for this country is badly in need of hands-on skills. Yet it is very difficult to recruit quality school-leavers who are being driven by parents to go to university.

The horrendous debt incurred in acquiring a degree is now being considered by many youngsters, as reflected in the reduction in numbers of potential students applying for courses. I hope Government, currently being very unfair to businesses in relation to the levy, will respond more quickly to applications for grant aid for apprenticeships, and simplify the process.

Otherwise the whole scheme will fall into disrepute. Russell Luckock is chairman of Birmingham pressings firm

AE Harris