The Apprenticeship Levy comes into force in April amid the confusion that often surrounds new Government initiatives. Some businesses see the levy as a form of tax on their provision of employment and while they complain about the unfair burden, fail to realise that they too can benefit from the scheme.
Let look at the basics
An employer with an annual wage bill that exceeds £3m will pay a levy equivalent to 0.5% of the excess. A wage bill of £4m will result in a levy of £5,000 and an allowance of £15,000 to spend on apprenticeships. This allowance will be topped up by 10% by the Government and held in a Digital Apprenticeship Service account for a maximum of 24 months.
An employer with an annual wage bill below the threshold will not pay the levy and won’t initially have to use the digital service. From May 2017, they can use the National Apprenticeship Service to find approved training and assessment suppliers. The government will pay 90% of the costs with the employer contributing 10%.
All sizes of employer will be able to select an apprenticeship framework or standard, choose training providers and assessors, and offer apprenticeship opportunities.
Make it work for you
Complaints from the levy-paying employers are to be expected, but it’s possible that even organisations which currently see no requirement for apprenticeships can still benefit from the scheme. By studying the longer-term needs for skills, training and development and seeing how such needs could fit within an apprenticeship scheme, they could easily recoup their investment. Training that’s been postponed as prohibitively expensive could now be funded. Use it or lose it Remember that under the scheme, funds within the Digital Apprenticeship Service are forfeited if not utilised within 24 months. In other words, if you’re a levy-paying employer, it’s time to get planning.
So, what makes an apprenticeship? The rules are quite straightforward:
- Both existing employees and new recruits can undertake an apprenticeship
- There must be a real job
- The apprentice must work towards an approved apprenticeship standard or framework
- The apprenticeship should cover a period of at least 12 months
- 20% of an apprentices time must be spent on relevant off-the-job training
With the vast range of standards available, it would be a very unusual organisation that was unable to benefit.
We’ve been talking to our customers and discovered that some of them simply don’t realise that they could be receiving significant funding towards their CIPS level 4 qualification by building it into a Public Sector Commercial Level 4 Apprenticeship. That’s a great shame because it’s potentially holding back the professional development of a lot of bright, young people.
Our advice: learn more about the levy and how you can make it work for you. Think about your organisation’s needs, and then talk to us.