The Apprenticeship Levy

What is the Apprenticeship Levy?

 

Apprenticeship Levy came into effect on 6 April 2017. It is a tax paid by UK employers to support the funding of apprenticeships. Public and private companies which pay more than £3 million in the wages are now liable to pay 0.5 percent of their pay bill into a fund. In England, the government adds £2 of apprenticeship funding for every £1 to spend on apprenticeship training. This is beneficial for employers as they can use this fund to upskill their workforce and help to solve the current UK skills shortage.

What is the Apprenticeship Levy?

Why has the apprenticeship levy been enforced?

 

David George, an apprenticeship standards and frameworks manager for skills organisation Semta, explains that “All key stakeholders agree that there needs to be a far greater investment in skills and knowledge acquisition programmes across the UK workforce.”

David has also been actively involved in developing standards for new apprenticeships. This rise in standards for apprenticeships includes a variety of industries such as aerospace, defence and automotive. The government hopes for a brighter future by 2020, and are taking action with the initiative of creating three million apprenticeships.

How will it work?

 

Companies need to pay the levy via PAYE on a monthly basis, this money goes into a digital account that can only be accessed to pay for apprenticeship training. Each employer will be given an allowance of £15,000 to offset against their levy payment, this will work as the same pattern for the personal tax allowance. Around 1.3 per cent of UK employers will be liable to pay the levy. Companies will be given a 24-month deadline to make use of their apprenticeship funds.

How will the levy change apprenticeships?

 

The new apprenticeship standards which are being set are likely to increase the funding from the levy. This will give employers more control over designing the training sessions, which will suit their requirements, thereby giving the government a positive impact.

Secondly, the levy will help double the annual level of spending on apprenticeships to £2.5 billion by 2019-2020, compared to the amount recorded from 2010-2011. To date, over 215 “Trailblazer” groups, involving more than 1,400 employers, have developed over 490 new apprenticeship standards. 157 of these are now approved for delivery.

For whom is the apprenticeship levy beneficial?

 

Apprentices of all ages will now be funded by the government by the means of this reform. Previously, an apprenticeship was considered for people between the ages of 16 – 18, but with the introduction of this new reform, even existing staff can up their skills to enter a different sector of the workforce via an apprenticeship. This will allow companies to review, which will assist in developing their workforce and to inculcate the training plans. Employers can now provide training even to an age group of 19 to 24-year-olds who have a Local Authority Education and Healthcare plan will receive an extra £1,000 per person.

Will all apprenticeships cost the same?

 

There are 15 bands of funding altogether and the apprenticeship cost will differ according to the field they are dealing in. The funding available will be ranging from £1,500 to £27,000. Higher banded apprenticeships will include industries such as engineering and technology (Hunter Consultancy only provides Information Technology Apprenticeships that are category 6, the highest band). There will be additional funding to support apprentices to help them meet minimum requirements in maths and English. Also, there are extra government contributions for companies who meet certain criterion, these include: recruiting a 16 – 18 year old, having less than 50 employees, successful completion of the apprenticeship.

What kind of apprenticeships is being offered by the various firms?

 

There are different levels, from a semi-skilled operator (level 2) through to a postgraduate engineer (level 7). The government and employers have worked hard enough to reform apprenticeships with the intention to make them more rigorous. Over the last few years, the government has aimed for a better structured and more in tune apprenticeship scheme for employees. At Hunter Consultancy we offer the following Trailblazer Apprenticeships: Cyber Intrusion Analyst, Cyber Security Technologist, Data Analyst, Digital Marketer, Infrastructure Technician, Network Engineer Apprenticeship, Software Development, Software Tester and Unified Communications Trouble Shooter.

What about employers who are not paying a levy?

 

Employers whose pay bill is less than £3 million a year will not need to pay the levy. Apprenticeship training costs will be paid by the government up to the funding band maximum, where employers will be needed to pay 10 per cent towards the costs, for those aged 19 and over.

In the case of smaller companies with fewer than 50 employees, the government will pay for all the costs for the new apprentices aged 16 to 18 and also for those aged 19 to 24 who are leaving care or have a Local Authority and Healthcare plan. In the coming year, employers might be able to target a proportion of their levy funds, for a generous reason which is to pay for smaller companies in their supply chain to train employees.

How will employers find a training provider to support their apprenticeship training?

 

The government has set up a “Register of Apprenticeship Training Providers” to help employers find and compare training providers who are approved to deliver the new apprenticeship standards.

Are there any issues related to the reform?

 

Training Experts City & Guilds recently surveyed 500 organisations. It was found that 1 in 3 employers who are due to pay the levy are still actually unaware of it.  However, employers understand the huge range of training this could offer which is beneficial for both employers and apprentice.

As with any major reform programme, there will be some challenges to overcome, including getting the message out there to employers about the new apprenticeships and the opportunities to develop the whole of the workforce.

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June 12, 2017

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