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Plans to introduce a new apprenticeship levy could cost the hospitality sector more than £100m, according to industry skills body People 1st.
The move was announced by Chancellor George Osborne in his last Budget, when he stated that it was a “radical, long overdue” approach to apprenticeship funding.
The plans would see large employers contribute the most, with a separate, as yet unannounced, arrangement for smaller businesses.
People 1st said that the government has yet to provide details on what it defines as a ‘large employer’, but expects it to be companies with more than 250 employees.
The Confederation of British Industry (CBI) has suggested that the levy will see employers contribute 0.5% of payroll, regardless of whether they engage with the new-look apprenticeships; a figure, which, for some, is considered too high.
People 1st said it estimates that this could end up costing businesses in excess of £100m, and has joined calls from employers for a more straightforward levy system in which the sector would play a leading role.
People 1st has urged the industry to speak out on the issue in an effort to help lessen its impact or risk facing a potentially “complex and unmanageable” system.
A public consultation is set to run until October 2 2015 and Simon Tarr, chief executive of People 1st, says it’s important that the sector is well represented to government.
He said: “It’s our concern that without sufficient input from the very businesses this levy is set to affect, some of the suggestions made in the government’s consultation could result in a complex and unmanageable system over which employers will have only limited control.
“Spring 2016 will see the introduction of a wave of new, simpler, more robust apprenticeships – designed and perfected by our trailblazer employers to provide fantastic career pathways.
“Figures suggest that employing apprentices can boost retention by up to 77% and have an extremely positive impact on the bottom line, yet fewer than 10% of businesses are using apprenticeships.
“If the levy is implemented and managed appropriately, this represents a huge opportunity for the industry to build a pool of talented staff that will help address key challenges including productivity and retention, and for businesses to achieve a return on investment through the many benefits that employing an apprentice offers”
