Spring statement: Schools will 'subsidise businesses' under apprenticeship levy

Small schools will end up subsidising businesses to the tune of £80 million under plans announced by the chancellor in the spring statement, according to school leaders’ union the NAHT.

Philip Hammond announced this afternoon that small businesses will be handed £80 million in funding to help them recruit apprentices under the apprenticeship levy.

Small businesses are exempt from paying the levy if they have a payroll of less than £3 million a year, and schools in the same position are supposed to be exempt from paying the tax.

But many small local authority-maintained schools with payrolls that fall under the threshold are not exempt, because their wage bills considered part of their local council’s wider payroll, and payments are top-sliced by town halls.

This means small businesses “are now being subsidised by small schools to the tune of £80 million”, while schools are not able to take advantage of the scheme themselves, said Paul Whiteman, the general secretary of the NAHT.

“There are very few suitable apprenticeship routes for school staff so schools pay in but see very little benefit. The apprenticeship levy has been a key driver of the funding crisis in schools, representing a 0.5-per-cent tax,” he said.

“There is now wide acceptance that education is one of the essential public services that should be in line for increased funding. The cost of providing state education is rising; state funding-needs to increase to meet that need.”