Scottish Government response to Apprenticeship Levy consultation

10 January 2017

The Scottish Government Response to the UK Government Apprenticeship Levy sets out how Scottish Government plan to develop a distinctly Scottish approach to apprenticeships and wider skills development to drive closer engagement with industry supporting Scottish Government's efforts to enhance productivity and economic growth in 2017-18 and beyond.

In July 2015 the UK Government announced its plans to introduce a UK wide Apprenticeship Levy from April 2017. Employers will pay 0.5% of their annual pay bill in excess of £3m through the PAYE system. Those with an annual paybill of £3m or less will be exempt. The Levy will apply to employers in the public, private and third sectors.

The UK Government took this decision to introduce the levy without any prior consultation with the Scottish Government or indeed employers. While training levies and their collection are a matter reserved to the UK Government - skills policy including responsibility for apprenticeships is a fully devolved matter.

The UK Government will use the funding generated through the Levy to support its commitment to deliver apprenticeships in England during the lifetime of the current UK Parliament in addition to allocating a share of the Levy to each of the Devolved Administrations.

On 14 November 2016 the UK Government announced the Scottish Government’s settlement from the UK Apprenticeship Levy as set out below:

Population share of levy funding (£m)

2017-18                 £221m

2018-19                 £230m

2019-20                 £239m

This is not £221 million of additional money for Scotland, but largely replaces what the Scottish Government would have previously received as a traditional share existing UK Departmental apprenticeship spend.

As in previous years the Scottish Government will use this funding, as part of the overall Scottish Budget, to support their extensive skills, training and employment provision, including their Modern Apprenticeship programme.

In direct response to the views of employers in Scotland, and reflecting on the Apprenticeship Levy consultation responses received, the Scottish Government will deliver a range of interventions that further support skills, training and employment in Scotland. In particular they will:

  • support measures to tackle structural unemployment issues and challenge inequalities and under-representation in the labour market by supporting people who face barriers to education, training or employment, in partnership with employers, local authorities and the third sector;
  • continue with the implementation of the Youth Employment Strategy: ‘Developing the Young Workforce’ specifically including the development of the network of Developing the Young Workforce Regional Groups and the delivery of employment-focused college provision for young people; and
  • respond to the immediate skills needs of employers, through:
    • the establishment of a new Flexible Workforce Development Fund; and
    • on-going and sector-specific skills support for priority sectors in the economy such as digital, care and early years.