Budget 2015: reactions to the new apprenticeships levy

08 July 2015 -

Will Chancellor Osborne’s new apprenticeship levy boost Britain’s productivity? It’s a good first step, though the jury’s still out

Matt Scott

In the first Conservative Budget for 20 years, Chancellor George Osborne has introduced a number of changes that will affect managers in UK businesses.

The most significant change for business leaders looking to nurture the next generation of managers is the introduction of an apprenticeship levy for large firms.

Osborne said the new levy would still mean businesses offering apprenticeship schemes “get more back than they put in” and that it will co-exist with a commitment from the Chancellor to create three million new apprenticeships.

Petra Wilton, director of strategy at the CMI, said the new levy needs to run alongside ‘rapid action’ to provide access to higher quality apprenticeships in order to secure a 'more productive future'.

“The apprenticeship levy on large companies has to go hand in hand with rapid action to make sure employers can access high quality apprenticeships at higher skills levels,” she said. “We particularly support the employer-led development of a new degree-level apprenticeship in management and leadership.

“It will help employers train the leaders of the future and its focus on professional management will put British business on track to a more productive future.”

The Chancellor also used the Budget to increase the National Insurance employment allowance for small firms by 50% to £3,000 from 2016 and cut the rate of corporation tax to 19% from the current 20%.

There is also a clampdown on the so-called abuse of non-dom status, with Osborne announcing plans to abolish permanent non-dom status. This means that anyone who has lived in the UK for 15 of the last 20 years will have to pay the same level of tax as other UK residents.

All of this comes against a backdrop of the government wanting to make the UK the world’s most prosperous major economy by the 2030s.

Wilton said that in order to achieve such a target, the government needs to look at the productivity of UK businesses, adding that poor management is currently costing the UK economy more than £19bn a year.

“Management is the missing piece in the productivity puzzle,” she said. “CMI research shows that poor management costs the UK economy more than £19bn a year and business investment in management development has long lagged behind our competitors.

“We hope the Chancellor uses his forthcoming productivity speech to set out how he will change this.”