Last updated: 11.09.17

Businesses report 'unsustainable' cost rises thanks to Apprenticeship Levy

The British Chambers of Commerce has revealed that businesses are reporting unsustainable cost rises thanks to the upcoming Apprenticeship Levy.

UK businesses have said that they are facing “unsustainable” costs as a result of government measures that propose increased pay, funding for apprenticeships and ensure that employees save up adequate funds for their retirement, it has been reported.

According to the British Chambers of Commerce (BCC), in a survey of 1,400 companies, four in every five firms claim that their costs have increased this year.

Three quarters of the businesses said that rising costs from pensions auto-enrolment and the rise in the National Living Wage (NLW) had directly affected them.

In addition to this, a fifth of businesses said it was the upcoming Apprenticeship Levy that had already impacted their company, while eight per cent said the Immigration Skills Charge had increased costs.

As reported by the Independent, it is believed that many businesses will respond to planned increases to the NLW by slowing pay rises and minimising employee benefits.

But, if the UK wants to remain both attractive and competitive - according to the BCC - actions must be taken to stop further rises to the cost of doing business. The BCC also warned that companies and organisations would be forced to replace workers with machines if employment costs grow further.

Yet despite these concerns a spokesperson for the government said: “This government is unequivocally pro-business but we are determined to build an economy that works for all.

“That includes ensuring everyone is paid a decent wage, has the right to a workplace pension and the opportunity to develop their skills.”

This coincides with an assessment of the World Bank, which ranks the UK as the seventh easiest country in the world to do business, ahead of the US, Germany and Japan.

Earlier this year in April, the government increased the NLW to £7.50 for people over 25 years of age. However, this figure is still below the ‘real’ living wage that has been calculated by the Living Wage Foundation of £9.75 in London and £8.45 in the rest of the country.

At the beginning of April next year, the Apprenticeship Levy of 0.5 per cent of a payroll will be applied to businesses with a turnover of more than £3 million. However, the levy is being praised by many companies and institutions as the proceeds of this will be invested in training and vocational education.

The levy is an attempt by the government to tackle the UK’s prevalent skills shortage due to a lack of investment in training and poor levels of numeracy and literacy.


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