Apprenticeship levy faces immediate backlash

Three million young people will be given apprenticeship opportunities under a proposal revealed as part of the Chancellor’s Autumn Statement on Wednesday.

A levy of 0.5% would be placed on the payrolls of UK businesses, and would raise around £3bn a year, George Osborne revealed.

It was part of a plan to ensure big business was involved in the cost of training workers, he said. The levy would be in place from April 2017.

But the Institute of Directors quickly came out swinging, describing it as little more than a “payroll tax”.

“At 0.5% of payroll, it will be a big hit to big employers”, the institute’s head of employment and skills policy Seamus Nevin said.

“With the OBR also saying that employers could pass the cost of the levy onto employees, the government must also be careful of the impact the levy, combined with the incoming national living wage, could have on wage growth and job creation.”

The Confederation of British Industry had similar sentiments, with director-general Carolyn Fairbairn concerned by the cost.

“Even those businesses most committed to training and development won't be able to recoup their outlay, and it looks like an additional payroll tax”, Fairbairn said in a statement.

EY head of tax policy Chris Sanger told the BBC the levy appeared to be an attempt by the chancellor to sugar-coat a new tax on business.