Scottish Government response to the UK Government apprenticeship levy

Foreword by Jamie Hepburn MSP

The UK Government will introduce the UK Apprenticeship Levy in April 2017. As a result, employers across private, third and public sectors will be required to pay 0.5% of their paybill in excess of £3 million pounds to Her Majesty's Revenue and Customs.

The Apprenticeship Levy is a new way of the UK Government raising funds directly from larger employers, a policy they announced in 2015 without consultation with the Scottish Government or employers, despite apprenticeship policy being a fully devolved matter. While the Apprenticeship Levy will be a new tax on employers, its proceeds will largely be replacing existing apprenticeship funding in England, of which Scotland will receive a proportionate share.

While the levy will result in a small increase in the funding we received from the UK Government previously in relation to apprenticeship activity, the fact that the public sector is required to pay will reduce Scottish Ministers' spending power by £30m in 2017-18. This is against the backdrop of wider austerity measures being imposed by the UK Government resulting in continued reductions in budgets for public services and a failure to revive the economy.

From the outset the Scottish Government has undertaken extensive engagement and consultation from employers to understand the impact that the levy will have, but also how they would like Scottish Ministers to respond.

Following the conclusion of our recent consultation we published the independent analysis of the responses which showed broad employer support for all of the options we consulted on. This report now sets out how we plan develop a distinctly Scottish approach to apprenticeships and wider skills development and drive closer engagement with industry in our efforts to enhance productivity and economic growth in 2017-18 and beyond.

JAMIE HEPBURN
Minister for Employability and Training