The government's apprenticeship levy could lead to “significant” job losses, Confederation of British Industry (CBI) director-general Carolyn Fairbairn has warned, as a new CBI survey shows just one in six businesses think the new tax is the right approach.
Chancellor George Osborne first announced the apprenticeship levy in July’s summer budget, and revealed in last month’s Autumn Statement that the levy would be a 0.5 per cent payroll tax for companies whose wage bills exceed £3m.
But Fairbairn told the Sunday Times over the weekend that unless the government alters the proposed tax before it goes into effect in April 2017, it is “inevitable there will be significant job losses”, saying: “There is a gulf in the government's understanding of what it is doing here and the impact on sectors like retail and its most vulnerable employees.”
A CBI survey out today found that one in six businesses believe the new apprenticeship levy is the right approach to tackle Britain’s skills shortage. Almost half said they expected the tax to be costly and bureaucratic.
Commenting on the findings, Fairbairn said there is a “danger of government complacency, with companies facing multiple increasing costs, through the apprenticeship levy, the national living wage and unreformed business rates, these are acting as a cumulative drag that could hamper growth”. Citing the government’s separate plans for a National Living Wage, she added: “The government must be careful not to sacrifice prosperity for political expediency by saddling businesses with costs that could harm investment, which is critical to increasing productivity.”