The Apprenticeship Levy, which the Government hopes will help create three million new apprentice positions, is due to come into force in April next year. Draft Regulations have now been produced, setting out how employers should calculate, report and pay their Levy liability.
A recent study by the British Chamber of Commerce showed that, just 6 months before it goes live, two out of five businesses (39%) did not understand or even know about the Levy. Of those that do, many are placing the focus of “apprenticeships” on young people entering employment, whereas this opportunity could and should, benefit a wide range of development opportunities and an assumption that only young workers should benefit from the Levy could easily lead to age discrimination challenges.
The BCC survey of 1600 employers indicates a lack of awareness of the Levy which should seriously worry the Government officials tasked with implementing and operating it. In part, this may stem from the widespread view that the Levy is essentially just another tax – only 26% of BCC respondents expect to recover all their Levy payments and only 11% say the Levy will lead them to increase apprentice recruitment anyway.
It must now really be up to the Government to do enough to make next April less of an unhappy surprise for that 39% and more of an opportunity for businesses. Employers should consider what training they currently provide and ascertain what will fit into an approved “apprenticeship” framework, so that they can reap the best possible value from the Levy. In many cases employers may be distracted by an outdated stereotype of the apprentice as a young boy or girl who just drops things and gets under your feet on the factory floor, but in fact the scope for upskilling your workforce via the Levy is material – as should be the incentive to make the most of the Levy if there is a chance that Brexit will limit your access to suitably-experienced people.
Today (25 October) the UK Government has provided further details on how the new funding for apprentices is going to work from 1 May 2017, whether you pay the Apprenticeship Levy or not. It has updated its guidance to reflect this.
The main measures confirmed today are:
- Employers will have a longer period of time over which to spend any funds in their digital account – funds will expire 24 months after they first entered the account, an increase from the original proposal of just 18 months;
- Employers will be able to transfer digital funds to other employers in their supply chains, sector or to Apprenticeship Training Agencies in 2018. A new group has been set up to help the Government develop this system; and
- Higher funding for STEM apprenticeship frameworks and higher pricing of apprenticeship standards to support improved quality, and greater flexibility to train those with prior qualifications.
The Government has also confirmed that it is providing more support for younger apprentices and disadvantaged people, including:
- 100% contribution from the Government to the cost of training for small employers (those with fewer than 50 employees) that will not pay the Levy and which take on apprentices who are 16 to 18 years old, 19 to 24 year old care leavers or 19 to 24 year olds with an Education and Health Care Plan;
- £1,000 each from the Government to employers and training providers when they take on 16 to 18 year olds, 19 to 24 year olds who were in care or who have an Education and Health Care Plan;
- Help for training providers to adapt to the new, simpler funding model through an additional cash payment equal to 20% of the funding band maximum where they train 16 to 18 year olds on frameworks; and
- A simplified version of the current system of support for people from disadvantaged areas to ensure the opportunity to undertake an apprenticeship is open to everyone, no matter where in England they live, their background or family circumstances.