Apprenticeship scheme to cost councils millions, LGA cautions

The Local Government Association (LGA) has warned that the government’s plans to drive the number of apprenticeships will cost councils millions of pounds, stretching budgets further.

From April 2017 onwards, all public and private employers with a wage in excess of £3 million will be required to contribute 0.2 per cent in a new Apprenticeship Levy. The contribution will then be used to fund the creation of three million new apprenticeships by the end of the decade.

However, the LGA outlined that compelling councils to make the contribution would place significant financial stress on authorities,with the levy calculated to cost around £207 million per year. Less than 10 per cent of town halls are expected to be exempt from the rules.

Part of the government’s proposal will mean public sector employers must ensure at least 2.3 per cent of their workforce is made up of apprentices. The union argued that councils will therefore have to create 22,000 new apprenticeships each year, adding an extra £400 million to their wage bill.

A number of council leaders are urging the government to allow them to be exempt from the apprenticeship target. In addition to extra costs, local authorities would be forced to create more positions to accommodate apprentices, where it has already reduced staff numbers by 40 per cent in 2010.

The LGA has advised that any money raised from the Apprenticeship Levy be controlled at the respective local level in order to allow each area to use the money to create skilled apprentices that target plugging local skills gaps and meet employers’ needs.

Councillor Nick Forbes, LGA vice chair, said: “Councils support the government's ambition to create three million apprenticeships. Good apprenticeships can give people the experience, skills and understanding that can often lead straight into a full-time job.

“Paying the Apprenticeship Levy and meeting national apprenticeship targets each year will add further financial pressure onto already stretched local services.”