How to reform apprenticeship levy to ease skills crisis – Dave Jackson

IF companies can get tax relief for spending their money on research and development or plant and machinery, why on earth can’t they claim allowances for investing in young people?

What more can be done to encourage apprenticeships?

I say this as the founder and chairman of Hudson Contract, the UK’s largest tax status and employment contract service to the construction sector and one of Yorkshire’s biggest family-owned businesses. Our sector relies on a ready supply of skills to build new homes and infrastructure but the national apprenticeship scheme is a tangled, bureaucratic mess.

Look at the evidence. Introduced in 2017, the apprenticeship levy has failed on every measure. Employer investment in training has declined, overall apprenticeship starts have fallen and far fewer apprenticeships have gone to young people.

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Our own Freedom of Information requests have shown how difficult it is to get any value out of the levy system. Last year, more than £1.2bn of unused apprenticeship levy funds ‘expired’ and passed over to the Government. That was equivalent to nearly half the annual total raised through the levy. So much for the Treasury’s promise that companies would be able to get out more than they put in.

David Jackson is founder and chairman of Bridlington-based Hudson Contract.

The Government should be bold and introduce tax incentives to encourage companies of all sizes to take on apprentices. This would be easy to administer and rapidly accelerate the number of places available, but I don’t suppose Ministers would be brave enough to do it because it is too simple and would involve killing off a pointless quango or two.

Doing business is complex enough. At Hudson, we specialise in helping construction SMEs comply with wave after wave of tax and employment legislation so they can get on with building projects. We have also tried to make it easier for them to hire apprentices. Hudson launched its sponsorship scheme a decade ago in Bridlington and Scarborough with a promise to pay half the wages of every apprentice for the first year.

More than 170 young people have “earned while they learned” in the programme and many have become self-employed tradespeople, the first step towards becoming an entrepreneur and running a business. To celebrate our 25th anniversary this year, we are expanding the scheme nationwide and will sponsor 25 apprentices at 25 companies across England and Wales. My wife Lesley and I look forward to hearing of more success stories.

If young people don’t get a good start in life, they can go down the wrong road. It was difficult when I left school in Bridlington because there were few options open to me. Luckily, I won an apprenticeship as a draughtsman in Leeds where I learned the discipline of being orderly and organised, traits that helped me build a company now turning over £1.6bn. If you have been successful in business, I believe you have a duty to give others a leg up.

Hudson is now looking to expand its activities supporting apprenticeships. We believe we can connect secondary schools leavers with meaningful training opportunities at our 2,500-strong client base across England and Wales. We would be using our network to match supply with demand. Colleges would be invited to use this apprenticeship hub. Watch this space.

In the construction industry, Hudson is the largest private sector collector of tax. We have in-depth knowledge and understanding of the tax system from our ongoing compliance with all tax laws and HMRC’s acceptance of our business model. As The Yorkshire Post has suggested, Prime Minister Boris Johnson would be very welcome to visit us in Bridlington to see what we are doing to create meaningful training opportunities.

Young people are our best investment. We need them to help build new homes and infrastructure for Britain. We know the apprentices who go on to become self-employed tradespeople enjoy great financial freedom and flexibility in their careers. Many start and grow companies of their own, creating wealth and prosperity in their communities and opportunities for the next generation. Let’s scrap the failing national apprenticeship scheme and replace it with real incentives to invest in the future.

David Jackson is founder and chairman of Bridlington-based Hudson Contract.