The Apprenticeship Levy (aka The Eleventh Commandment)

Thou shalt pay HMRC 0.5% of your wage bill to invest in apprenticeship training from April 2017 if: 

(*) Your annual wage bill exceeds £3m

(**) You are based in England 

(***) It is spent within 24 months 

(****) It is used for Government-approved courses

(*****) You use Government-endorsed training providers

Evolve 11thcommandmentFI

This means that if your school has an annual wage bill of £4m, from April you will have to make a £5,000 payment into your new digital apprenticeship account. This ‘voucher’ can only be redeemed if you register any of your workforce on approved apprenticeship training programmes.

This new scheme, which will come into effect on 1st April, is called the Apprenticeship Levy and you are not alone if you are hearing about this for the first time.

The Government officially introduced the Apprenticeship Levy in October 2016 to try to encourage more employers to invest in staff training and development (1). The Government’s aim is to train three million new apprentices by 2020 and to address the decreased focus on employee training outside the workplace.

It is the responsibility of employers to notify HMRC every month about eligibility, with payments set to start in May 2017. As well as the amount paid into the levy accounts by employers, the Government will add an extra 10%, which means that for every £1 paid in, the employer will have £1.10 available to spend on workforce development.

To incentivise smaller, non-levy paying employers (since their wage bill is less than the £3m threshold), the Government will pay 90% towards the cost of training an apprentice. It is anticipated that many larger employers will be part-funding this offer by not spending their full levy entitlement.

My role at Evolve has led me to spend significant time over the past decade trying to navigate the complex world of apprenticeships, the Skills Funding Agency (formerly the Learning Skills Council), the Qualification and Credit Framework, Awarding Organisations, the Register of Training Providers and Ofsted.

We made the bold decision to walk away from Government funding support for staff training due to the bureaucracy and lack of quality, relevance and currency in the approved training programmes for our sector. Instead, we formed an exciting partnership with a university provider who proved to be much more effective at co-developing a fit-for-purpose vocational training qualification than their colleagues in the further education sector. Although this step meant that we could no longer access any financial support from the Skills Funding Agency, the quality of the training and its respectful appreciation of the wider business goals meant that it was a simple decision to make.

Evolve Cohort Newman

Twelve months later, two things have become clear:

  1. Evolve’s case study was not unique and helps to explain why the Government has overhauled the apprenticeship system (again!)
  2. The extended apprenticeship that I served during this time learning the ropes has placed me in a rather niche position of expertise on this subject.

New apprenticeship training programmes are now called ‘Trailblazers’ and have been design-led by employers, not awarding organisations. This is a significant improvement, because the motive of awarding organisations in the past may have been more about increasing learner numbers rather than the learning experience itself.

Evolve sausage_real

The second key development with this new generation of apprenticeships is that all providers must be approved and feature on the Register of Apprenticeship Training Providers (RoATP). Previously, there have been unscrupulous entrepreneurs who have found ways of expediting apprenticeship qualifications to get learners through their sausage machine quickly.  This became a lucrative business in a number of sectors, with both employers and employees left feeling cheated and disillusioned about the very nature of apprenticeship programmes.

The RoATP is designed to keep a much tighter rein on apprenticeship providers and should help to ensure that high-quality provision comes as standard and not exceptionally.

There are just four months to go before many employers will be making their first levy payment, but some of them are still unaware of this. The extension from 18 to 24 months for employers to use their levy vouchers will help, but more promotion is needed to ensure that employers are able to invest a percentage of their hard-earned profits wisely.

It is important to note that you do not need to take on new recruits in order to use your levy vouchers. This is a misconception that I have heard on numerous occasions when speaking with employers, since the apprenticeship title has always been associated with newcomers into businesses where funding has traditionally been focused.

Many Trailblazer Apprenticeships have been developed at levels 4 and 5 (higher-level apprenticeships), and there are also degree-level apprenticeships (level 6) already available in some sectors. Using levy vouchers to upskill, retrain or re-energise experienced middle management staff could be an option worth exploring. Similarly, if you have an excellent member of staff who has expressed interest in switching roles but lacks the required qualification and training, then this could be a beneficial strategy and de-risks the appointment.

In the education sector and with collective wage bills clearly in excess of £3m, academy chains certainly seem to be further ahead of the game with the development of their investment strategies. Some have even organised events where training providers have presented and exhibited their offers across a range of different areas – from business administration, teaching assistance and catering to even sports coaching. 

Local authority schools under the £3m threshold may feel as though they do not have anything to worry about in this regard. However, a recent briefing document (2) from the Department for Education has confirmed that their workforce is regarded as one and the DoE expect all their schools to make the 0.5% levy contribution. Following this publication, I would like to see more leadership at local authority level with such a significant policy directive and so much cash at stake, especially when they are already implementing uncompromising austerity measures.

A co-ordinated local authority approach might include a skills audit within each sector to identify gaps in provision, which could lead to publishing recommended courses and providers. The retraining opportunity could also be incorporated into redundancy plans, with reliable and experienced staff redeployed into other local authority roles. One of the intentions of the revised apprenticeship agenda is to ensure that more expertise is shared within sectors through greater collaboration and partnership, and a skills audit could help to facilitate this. Local authorities could encourage greater input from employers and experienced training providers, possibly conducting a labour market analysis to ensure that qualifications being developed have significant local value.

So what is Evolve’s response to the Apprenticeship Levy?

Well, it seems that we may be able to again access apprenticeship funding for our staff training and development courses. Our recently-launched Level 4 Certificate in Health Mentoring is being submitted as a Trailblazer Apprenticeship and, if successful, will mean that Government funding is finally being directed to a robust, high-quality and employer-led development programme.

A successful application will also mean that other employers will be able to benefit from the holistic and innovative training programme. We are currently in discussion with schools, hospital trusts and universities about how we can train and equip their teachers, support staff, managers and students to more effectively support the health and wellbeing needs of their learners who are involved in educational courses.

The next few months will certainly be interesting and at least one thing in this ever-changing space is certain – we will all be hearing a lot more about the Apprenticeship Levy between now and the end of May.

References

(1) For further information about the Apprenticeship Levy, the following link will take you to the source of all the latest information:

https://www.gov.uk/government/publications/apprenticeship-funding-from-may-2017

(2) This site contains the recent briefing (5th January 2017) for schools and education stakeholders regarding the Apprenticeship Levy and Public Sector Duty:

http://amazingapprenticeships.com/resources/apprenticeship-levy-and-public-sector-duty-briefing-for-schools-and-education-stakeholders/

John Bishop, Managing Director