New apprentices’ levy is nothing to fear, says Business Secretary Sajid Javid

The business secretary said companies can keep the cash if they fund their own training schemes

Sajid Javid, arrives to attend a cabinet meeting at Number 10 Downing Street (Reuters)

Companies have nothing to fear from the introduction of a controversial apprenticeship levy, according to the Business Secretary.

Sajid Javid MP told The Independent that companies made to pay the tax from next year would be able to keep the cash if they use the money to fund their own schemes.

However, many in the retail sector in particular have been critical of the tax and said the Government had failed to properly consult with them over how it should be implemented.

Mr Javid said: “It will be spent by the companies themselves … It has got to be spent on apprenticeship training and for those companies that are already investing in apprenticeships and training, it will make no difference.

There had been fears that the 0.5 per cent tax on all companies with UK payrolls in excess of £3m a year, would end up going to third party suppliers, rather than being used internally for funding apprentices. But Mr Javid said this was not the case. Speaking in south London at the launch of a new scheme to encourage apprenticeships in the building trade, he added:

If you’re not doing it, it’s an incentive to think about it. If you still don’t do it you will lose the money and it will be given to other companies that do want to use it.”

But the British Retail Consortium, which represents the majority of high street and online stores, said more needed to be done to explain how the cash will be spent. If you’re not doing it, it’s an incentive to think about it. If you still don’t do it you will lose the money and it will be given to other companies that do want to use it.”

But the British Retail Consortium, which represents the majority of high street and online stores, said more needed to be done to explain how the cash will be spent.

“Retailers are still deeply concerned about the implementation process and how it’s going to work in practice,” a spokesman said.

“We are an industry with an incredibly strong track record of training people and the Government should take that into consideration.”

The comments follow a similar warning in November from Carolyn Fairbairn, the director general of the Confederation of British Industry, who said the levy could lead to thousands of job losses.

Tesco chief executive Dave Lewis also called the levy part of a “lethal cocktail” set to hit the industry, alongside the new national living wage, lower profits and crippling business rates – which the Government has promised to reform, although it missed a self-imposed deadline of last year to lay out its plans.

He has also called for more discussions with the Government over the levy, while Dixons Carphone boss Seb James – a close friend of David Cameron – has said he is concerned the charge will lead to a voucher system that “will no doubt spawn an industry of consultants and add a lot of friction and cost”.