Uphill battle to claw back huge pay tax
Councils need hundreds of apprentices
YORKSHIRE’S LARGEST local authorities are effectively being told to employ and train hundreds of apprentices each and every year to fill chronic national skills gaps if they want to claw back a combined £6.4m tax on their payroll.
The money, plus an extra 10 per cent top-up from the Government each month, can be claimed back by employers to spend on apprenticeship training but some of the region’s biggest councils told The Yorkshire Post they face a real challenge to recruit enough apprentices in order to do so.
To fully recover a levy of £2m, North Yorkshire County Council needs to appoint 913 apprentices every year – a figure it said was “well beyond” local need and demand for apprenticeships from young people in the region.
Leeds City Council employs 290 apprentices but still has a huge task to hit its governmentenforced target to employ more than 500 apprentices and reclaim an estimated £2.4m.
Hull Council has to double its number of apprentices, to 160, to recoup its £600,000 levy in full, while Sheffield Council said its levy was £1.4m but could not confirm how many apprentices it needs to claw back that total.
The new Apprenticeship Levy began in April in what is the biggest national shake-up of apprenticeship funding for a generation.
Public bodies with 250 or more staff also have to have apprentices accounting for at least 2.3 per cent of their workforce.
Justine Brooksbank, assistant chief executive of North Yorkshire County Council, warned: “To fully recover the levy of £2m, the council needs to appoint 913 apprentices, every year – a figure which is well beyond both service need and numbers available in the local economy. The target in effect requires around a quarter of all county council vacancies to be filled by new apprentices.”
Councillor Mohammed Rafique, Leeds City Council’s executive board member for employment, enterprise and opportunity, said: “The council’s apprenticeship cohort has been expanded from 150 to nearly 290 in the last 12 months. However, this expansion, while significant, equates to only 1.7 per cent of the council’s head count and leaves us with more work to do.”
The levy sees the Government charge all employers 0.5 per cent of their wage bill, if their respective bill exceeds £3m a year.
The funds are then made available via a new digital account for employers to pay for training for apprentices from a recognised provider. Funds expire after two years and any left unclaimed are lost.
The Government insists the policy is an incentive for employers to offer apprenticeships and fill skills gaps in the economy. It wants to create 3m apprenticeships by 2020 and expects the levy to raise £2.5bn by 2019-20 for apprenticeships in England.
YORKSHIRE’S PUBLIC sector bodies have a hard task ahead to both compete with private sector employers to attract apprentices and to challenge misconceptions about what apprenticeships entail, officials said.
Both private and public sector employers with a wage bill exceeding £3m have to make annual levy payments worth 0.5 per cent of their pay bill, which incentivises apprentice recruitment but puts the two sectors in even greater direct competition at a time when council budgets have been cut.
North Yorkshire County Council has to recruit 913 apprentices every year if it is to spend its annual apprenticeship levy, but the authority’s assistant chief executive, Justine Brooksbank, said: “In North Yorkshire, the availability of apprentices presents a significant challenge. Recent figures show that unemployment in the county is significantly less than the national average.
“The county council has to compete hard for staff locally which will be no different for apprentices when all local employers are also trying to recruit them.” As reported by The Yorkshire
Post this summer, the North York Moors National Park Authority fears competition from private firms means the public sector is in danger of falling short of the target for 2.3 per cent of its workforce to consist of apprentices.
“While this target does not present a challenge to the authority, it does mean that there is significantly more competition to attract apprentices,” officers said in a report.
“The picture in North Yorkshire is such that there are simply not enough young people looking for apprenticeships for the public sector to meet its target – this is before the needs of the private sector locally are taken into consideration.
“An inevitable consequence of this is that young people are becoming more selective in what they choose to do and more aware of what other employers offer.”
Key to filling apprenticeship positions will be educating people about what opportunities they offer in the modern working world, said Councillor Mohammed Rafique, Leeds City Council’s executive board member for employment, enterprise and opportunity.
He said: “There is still a bit of a myth around what an apprenticeship is. People tend to think they are connected with the construction industry but they could be in any field of work at any level.”
Both councils have plans to boost apprenticeship numbers.
Ms Brooksbank said: “The county council is taking steps to develop an innovative apprenticeship programme which will focus on North Yorkshire’s future needs, targeting shortage areas such as civil engineering and adult social care, accountancy and legal services.
“These apprenticeships will range from entry to higher level – equivalent to degree qualifications – and will be used to supplement the county council’s usual graduate entry.”
She added: “The county council hopes that for hard to fill graduate areas such as engineering it will provide a bigger pool of applicants trained and skilled to a high level and greater interest from local young people who can complete their qualifications free of debt.”
According to Coun Rafique, Leeds City Council – the second largest metropolitan local authority in England – will not be making a standing start as it strives to reach the government’s 2.3 per cent target.
“The council has long been an advocate of apprenticeships as an opportunity to develop our workforce, providing entry and progression routes for residents to earn while they learn, and ensure the council as an employer is more representative of the diversity of the city.
“While this commitment has been a part of our organisational development approach for many years, it is being given new importance as a result of the introduction of the Apprenticeship Levy.”
He added: “The council will seek to support a continued growth in apprenticeship numbers and sustain the quality of the training.
“We will do this by marketing the council’s apprenticeships especially to younger people and people from priority groups and areas in the city and adopt higher level apprenticeships to support up-skilling our existing workforce to meet our workforce development plans.”
There is significantly more competition to attract apprentices.
A report to the North York Moors National Park Authority.
INCREASING THE number of young people entering apprenticeships is a laudable aim by the Government which rightly enjoys the support of both private and public sector employers.
Apprenticeships must never be viewed as being somehow inferior to attending university and gaining a degree. Not all young people benefit from university, and apprenticeships offer a route into work whilst also earning a wage.
Yet there are flaws in the Government’s scheme, as demonstrated by the difficulties being experienced by Yorkshire’s biggest local authorities. A funding formula that links recovery of money paid in training levies to the number of apprentices recruited is placing councils in difficulties.
This is proving a particular problem in rural areas such as North Yorkshire, where a target for the number of apprentices is not only unrealistic, but exceeds the number of young people likely to take up such places.
The target also begs the question of how apprentices on relatively low starting wages would support themselves, or find affordable accommodation, in areas where people on much higher pay are already finding they are priced out of the housing market.
The Government needs to rethink its funding formula on apprenticeships, so that the link between levies and recruits is less rigid.
Proper consideration must be given to those who live and work outside the large towns and cities, and it would make sense to listen more closely to the councils in agreeing realistic and achievable targets for the number of apprentices to be recruited.
Yorkshire’s councils are no less keen than the Government to help young people along the path to good jobs and rewarding careers. Ministers should heed the concerns of the local authorities and cooperate with them to deliver for families and their young.