Is the apprenticeship levy good for business?

George Osborne's £11.6bn raid on larger employers has divided opinion.

by Adam Gale

The chancellor pulled off an impressive piece of political theatre yesterday, bracing the country for heavy spending cuts only to present a far milder autumn statement than everyone expected, not least those on the opposition benches. But not everyone emerged unscathed. Ever an easy political target, business got an £11.6bn black eye from George Osborne’s apprenticeship levy.

Firms will pay a levy equivalent to 0.5% of their total payroll from April 2017 to fund apprenticeship training, though a £15,000 allowance means those with staff costs of less than £3m won’t pay a penny. The idea is to raise £11.6bn over this Parliament, funding three million apprenticeships.

Is it a bad thing? The downside is obvious. Whatever it’s called, this is effectively a new payroll tax on business. The government may spin it to say that 98% of businesses are too small to be affected, but those businesses that are affected employ around two thirds of the private sector workforce, so that doesn’t really fly.

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