Ahead of the Chancellor’s Autumn Statement and Spending Review on Wednesday (25 November), the British Chambers of Commerce (BCC) demands greater clarity over the scale and scope of the government’s proposed apprenticeship levy.

In a letter to key Ministers, the leading business group has called on the government to address ambiguity over the levy, which has led many firms to put their investment and training plans on hold. The BCC is concerned that the apprenticeship levy is effectively an additional ‘payroll tax’ on large firms, to be used by government to reach its apprenticeship target.

Since the announcement of the levy, there has been no further information on how it will work, what the rate will be and how it will be set, or even a definition of what constitutes a ‘large employer’ responsible for paying it. This has led to huge disquiet among small–and medium–sized companies who fear that they may yet fall within the scope of this new tax.

The government’s levy is supposed to help tackle skills shortages reported by business. However, many companies of all sizes are concerned about the perverse effects this new measure could have on other aspects of business, such as cash flow and existing training plans.

Commenting, Dr Adam Marshall, Executive Director of Policy at the British Chambers of Commerce (BCC), said:

“Businesses want to tackle skills shortages and drive up productivity, but the apprenticeship levy risks having the reverse effect.

“A lack of clarity around the scope, rate and scale is having a huge impact on business confidence. Many firms have decided to put training and investment on hold, and are concerned about the knock on effects of the levy on their cash flow, existing training schemes, and the bottom line. It’s important that this levy doesn’t undermine other types of vocational training, which could be better suited to some businesses.

“While businesses back the government’s drive to boost apprenticeships, they have real concerns about the current approach. The government must focus on improving the quality of apprenticeships to make them more attractive to employers, and provide clarity on how they will be paid for as soon as possible.”