The Chancellor, George Osborne, has set the apprenticeship levy at 0.5 percent of an employer pay bill in his Spending Review. The levy, which will be launched in April 2017, will only be imposed on firms with a pay roll that amounts to more than £3 million a year.
The Chancellor also announced that a new business led body will be set up to monitor and improve the standards of apprenticeships. This move follows a recent report from Ofsted, which mad plain its concern that the standards of basic apprenticeships were falling and in turn acting to devalue the qualification’s worth.
The new apprenticeship levy will fund the three million apprenticeships that the Chancellor has promised to create before the end of the current parliament in 2020.
“This is a huge reform to raise the skill-set of the nation,” the Chancellor said during the statement in the House of Commons today.
Osborne also announced that there would be a real terms increase for education funding during the current parliament and that the basic state pension would rise by £3.35 next year to £119.30 a week.
The biggest u-turn in the Chancellor’s speech came when he announced that his controversial plan to cut tax credits would be dropped. The plan had provoked vitriolic opposition from Labour and a bill that would have seen the policy’s introduction was defeated in the House of Lords last month.