Articles

Apprenticeship Levy

by Paul Sanders MInstSCE & Tracey Wood, Hopwood Hall College

Fellow ISCE members, I wanted to take the opportunity to raise awareness about recent changes to apprenticeships in England, and the introduction of the apprenticeship levy.

I am a massive beneficiary of the modern apprenticeship scheme and as such, I would encourage every business to consider apprentices as a route to filling the skills gap that technology related industries are facing.

It is important that employers are not just looking at their needs for staff today, but have one eye on what their needs maybe in the future. Please consider and gauge the required technical capability for your organisation to allow business as usual to be an uninterrupted process. This is not just a case of forecasting growth to estimate staff count, but having well-structured succession planning to help minimise the impact of losing decades of experience from a business when someone retires.

I am lucky enough that my training and development is still on-going and I am currently studying at the University of Bolton, working towards an MBA. One of the major benefits of the MBA has been the people I have met, and the knowledge and experience each person brings to discussion and debate is enlightening. I will now hand you over to one of my classmates, Tracey Wood of Hopwood Hall College. Tracey gave me a clear understanding of the changes and has kindly put together the following article to share with you a summary of the levy and how to make the most of it.

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I am a massive beneficiary of the modern apprenticeship scheme and as such, I would encourage every business to consider apprentices as a route to filling the skills gap that technology related industries are facing.

Apprenticeships and the Apprenticeship Levy have been significant talking points over recent months, and despite so many articles, seminars and workshops, many businesses that are subject to the Levy are still unsure what it means for them or how to maximise on their investment. Even more confused in this market are the non-levy payers, small or medium-sized (SMEs) who employed more that 16.1 million workers in 2017, which made up 60% of all private sector employment.

Since April 2017 there has been much publicity around the introduction of the apprenticeship levy and new standards, what does it all mean for business?

Who has to pay the Apprenticeship Levy?

The levy applies to employers in England who have an annual pay bill above £3m.

How is the Apprenticeship Levy calculated?

The levy is 0.5 per cent of the annual pay bill.

All employers will receive a £15,000 annual allowance, to be offset against the bill.

The levy will be collected by HM Revenue and Customs monthly through Pay as You Earn (PAYE). It can then be accessed by employers through an online digital service account.

How do you access your levy?

Employers can use the online digital service to pay for apprenticeship training for apprentices that work for at least 50 per cent of their time in England, which will be limited up to certain maximum funding bands. When the apprentice training starts funds (in the form of vouchers) will be taken from the account.

To register visit www.gov.uk/guidance/manage- apprenticeship-funds

What can the Apprenticeship Levy be spent on?

You can spend your Levy funds on apprentice training and assessment for either existing staff or new recruits as long as the training meets an approved standard or framework and the individual meets the apprentice eligibility criteria. They cannot be used on other associated costs such as apprentice wages, travel and subsidiary costs or the costs of setting up an apprenticeship programme.

Non levy payer?

If your business has a pay bill less than £3m it will not have to pay the Levy. In England, organisations will still be able to access government support for apprenticeships up to 90%/

New Apprenticeship Standards

The new apprenticeship standards, developed by employers for employers, now offer more role and sector relevant training. They deliver greater flexibility than the previous framework structure and support team members to develop suitable skills, knowledge and behaviour, helping them to perform their job roles to the highest possible standards.

Finding apprenticeship standards and sourcing apprenticeship providers has been made far easier visit;

www.instituteforapprenticeships.org/ apprenticeship-standards/

Financial Incentives

To support the uptake of apprenticeships moving forward, a number of incentives have been put in place to support the transition to standards and to achieve employer buy-in. These include:

  • An annual £15,000 allowance to offset the levy fee.
  • 10% monthly top up to levy funds.
  • £1000 per 16 to 18-year-old apprentice (and 19–24 year-olds with a local authority education, health and care plan).
  • Employers of less than 50 people will not pay a contribution for apprentices aged 16–18 or those 19–24 who meet the special requirements. 100% of the cost will be supported by the government.

In addition, business no longer need to pay National Insurance contributions for apprentices under the age of 25.

Apprenticeships are changing into technical education schemes and routes into work play a vital role in both improving the country’s employment record and developing the skills of our workforce, which in turn delivers economic value for all of us. Apprentices (either new staff or current staff) are “employees” that will help future-proof your business, improve your skills base, add diverse talent, deliver improved productivity, and bring new ideas and ways of working into the workplace. With new starters it is a chance to home grow your own talent who will embed your brand and company values.

Research has shown that a typical apprentice delivers productivity gains of over £10,000 per annum and, with the roll out of the government’s apprenticeship reforms – employer-led, credible apprenticeship training. Large employers will essentially now have ring-fenced apprenticeship training funds so it makes sense that apprenticeships form a significant part of their talent management strategy – there is no better time to invest in apprenticeships.

Hopwood Hall College is a recognised approved provider of Apprenticeships with 20 years’ experience of delivering apprenticeships. We have specialist team to work with employers to understand their workforce development needs and to support them to upskill their workforce through recruitment and training of apprentices, new staff and existing staff.

You can spend your Levy funds on apprentice training and assessment for either existing staff or new recruits as long as the training meets an approved standard or framework and the individual meets the apprentice eligibility criteria.