PRESS RELEASE: CITB To Reshape Its Levy And Support Employers In Scope To New Apprenticeship Levy
CITB to reshape its Levy and support employers in scope to new Apprenticeship Levy
Next April will see the introduction of the Government’s new Apprenticeship Levy (AL). Just under 600 companies (at a group level) will have to pay the AL as well as the CITB Levy. This will have important implications for the CITB levy. Therefore next year CITB will be formally consulting with the industry on a Levy proposal for the new Levy Order from 2018.
Ahead of that, we will use the rest of this year to look at options for reshaping the CITB Levy in this new context. Just as importantly we will engage with employers about the support that CITB should provide, including through a reformed Grants Scheme
This means that for one year a small number of employers will pay both the AL and an unchanged CITB Levy. To address this, for 2017/18 we will introduce a 12 month Transition Package to support those employers through the CITB Grants Scheme. This article sets out how this will work.
From April 2017, all businesses with a paybill of over £3m will pay the AL at a rate of 0.5% on their paybill above this threshold. At the same time, skill needs are changing and growing and a range of other government reforms will affect education and training provision. We therefore need to take a hard look at how CITB supports our industry, including a long-overdue overhaul of the Grants Scheme. We then need to look at how to pay for this through the CITB Levy. None of this is straightforward and our industry has asked us not to rush through any changes, but to engage and consult fully on these issues.
So this year we will explore with employers how to make the Grants Scheme more relevant and accessible and will communicate the outcomes by the end of the year. Then in 2017, there will be formal consultation on how to fund that through the new Levy Order in 2018. To this end, we have re-established the Levy Working Party, made up of representatives from across the industry, to examine potential levy options.
The Transition Package
While we will be consulting on a reformed CITB Levy, the AL will be introduced. We have therefore committed to introduce a Transition Package for those employers who will have to pay both.
We have engaged with industry on how to do this simply, with low administration costs, and in a way that pays out grant quickly to support training. Having explored various options, we have agreed to introduce a 12 month enhancement of grant claims for the period from 6th April 2017 – 5th
April 2018 to all employers in scope to both levies. The enhancement will be 100% of the grants paid in the agreed period.
We will cap this payment so that no employer receives more than their AL bill. We will calculate the cap on each employer’s AL bill, based on their 2016 CITB Levy Return. For example, an employer with a paybill of £10m would pay the AL at 0.5% of £7m (£10m-£3m), so would pay a total AL bill of £35,000. Therefore, the maximum that they would receive under the enhancement would be £35,000.
The enhancement will be paid in quarterly instalments from April 2017 as part of the standard CITB grant payment run. We are considering how best to ensure the cap applied is as accurate as possible and may carry out a reassessment of the cap soon after April 2018 based on the 2018 Levy Return when submitted.
Our modelling suggests that three-quarters of the employers impacted will claim enough to support their AL payment if they continue with their current levels of training and grant claiming. However, we also expect that the temporarily higher grant payment will incentivise employers to increase their training and grant claiming to obtain the maximum support available from the Transition Package. We will also work closely with the minority of employers who currently claim little or no grant to help them make better use of the Grants Scheme and access the enhanced grant.
We will contact each employer that is likely to pay the AL with more details on how the CITB Transition Package will work and how we can support them when the AL comes in next year.
Will this have any impact on other firms?
This Transition Package will not affect the grant funding and other CITB support available for the 99% of levy-registered firms who won’t have to pay the AL. This is because the bulk of the Transition Package will be financed by significant reductions in our operating costs, from making our back office functions more efficient.
How to have your say
At the same time, we are looking at how the CITB Grants Scheme can better support all parts of our industry. We have a number of ideas to explore with you and we are keen to hear from as many employers as possible so the reshaped Grants Scheme better meets your skill needs.
To get involved, visit citb.co.uk/employer-support/be-part-of-your-citb