With the new tax year looming, the introduction of the Apprenticeship Levy is just around the corner. Gerwyn House, the skills director for Intraining offers insight on the changes ahead…
The government are committed to creating three million apprenticeships by 2020. They see the introduction of the Apprenticeship Levy and new apprenticeship standards as the way to achieving this, by putting employers in control of apprenticeship funding and design.
The way in which apprenticeships are funded from May 2017 is changing, with almost all employers contributing something towards the cost of apprenticeships. This is dependent on the size of the employer and age of the apprentice;
• Levy employers will pay the full cost
• SMEs will pay 10% (with government paying the remaining 90%)
• Small Employers with less than 50 staff will be the only exception for a fully funded 16 to 18 year old.
The apprenticeship levy will be paid by employers who have a pay bill in excess of £3m (which is approximately 2 % of UK employers). They will pay 0.5 % of their payroll through the PAYE system to HMRC. Each employer paying the levy will have an allowance of £15,000 to offset against their levy payments.
Developing and growing employers with a payroll of £2.8m will also be expected to register, on the basis that HMRC expects employers to grow, and that during the tax year 2017/18 they may reach the £3m threshold.
The money paid through the levy will be deposited into the Digital Apprenticeship System (DAS) which employers will be able to use, to pay for apprenticeship training, but not assessment.
Apprenticeship standards and frameworks have all been re-categorised into 15 funding bands. Employers will be able to negotiate the price for apprenticeships, taking into account any training they offer in house and which qualifications they want included as part of the apprenticeship.
There is a 10 % top up that the government will put into levy paying employers accounts. So however much you have to pay, the government will add an extra 10% funds into employers accounts each month.
For large public sector bodies there has been a recent consultation on a new duty for the public sector to have 2.3% of its workforce comprised of apprenticeships. Each organisation, as well as paying the levy, will now have to aim for this target and report back to government on progress and its intentions if the target is not met.
One of the biggest facts about the apprenticeship levy that many employers are still unaware of is that levy funds can be used it to train existing staff members, if they require up-skilling or development. You don’t always need to recruit new apprentices. However, there are incentives for recruiting 16 to 18 year olds to help develop and support them, if this part of recruitment plans.
The DAS is only applicable to England, so despite employers paying the levy for all employees (even those that don’t live in England), the money deposited into the DAS will only be for employees who live in England. Funding for apprentices in Scotland and Wales will be as per the current system.
There are already many stories about the “Race to the Bottom”, where employers are arranging prices with training providers at cut price rates. But employers need to ask themselves what they want for their money? What does improved productivity, efficiency and bottom line look like? What level of quality would they compromise for a cheaper deal? What training and support can be added to the apprenticeship programme? It is important to consider all of these factors when discussing and agreeing the price for apprenticeship training.
The apprenticeship levy provides an opportunity to train and develop new and existing staff. When selecting new standards employers are ensuring that employees have the job competencies they need to perform that job role effectively.
The introduction of the levy provides employers with a chance to review their learning and development budgets, how they are spent, how graduate programmes are built and delivered, especially with the introduction of higher apprenticeships.
The 10% top up from government provides the opportunity for employers to get more out than they put in. Employers need to make the most of that fund, or lose it and watch competitors benefit from the money that they have paid.
Intraining is part of NCG, one of the UK’s leading education and training providers, which aims to support its clients to unlock potential through learning. Intraining has a team of Corporate Account staff to help employers understand how to maximise their levy funds, improve their businesses and increase staff productivity.
Some of the national employers who currently engage with Intraining’s services include npower Business, TalkTalk Business and AJ Bell.
“Having come through Intraining myself in a junior role and working my way through the company over a period of ten years, I have really seen the benefit of working with them on a very personal level,” said Lauren Morgan, Benefits and Transfer Out Manager for AJ Bell.
“Training provides employees with the tools to carry out their day to day tasks. They are the people who process the work that drives the business forward and are a huge contributor to the reputation of the company. An engaged and well trained work force ensures that we provide a good service to our customers whilst also helping the business to grow.
“Intraining’s success is really driven by their focus to provide great training and development to individuals and place them with companies who are really engaged with providing good training to their employees. Having personally benefited from their support I would highly recommend them to other employers.”
Across the UK Intraining works with over 10,000 employers across all industries and last year developed and trained over 10,000 apprentices.
Intraining is an Ofsted Grade 2 Provider and provide 12 Apprenticeship courses which range from health and social care to digital media.
For a free consultation call today on 0330 123 1300 or email email@example.com