Gareth Jones, GMLPF’s Apprenticeship Strategy Manager, summarises the key updates from BIS on the Apprenticeship Levy. Gareth’s report highlights updates to the conditions that apply to Levy-paying employers and the introduction of conditions for non Levy-paying employers.
We strongly advise GMLPF members to start having conversations with their employers, if they haven’t already, regardless of whether they will be paying the Levy or not.
Levy- paying employers
- The £15,000 Apprenticeship Levy Allowance will be operated on monthly basis (£1250 per month), with any unused allowance rolling over to the next month
- It’s is the employer’s responsibility to – calculate whether they have to pay the Levy – make arrangements to pay it alongside their PAYE bill every month
- Levy-paying employers will be able to register for an online account with the Digital Apprenticeship Service (DAS) from January 2017. 7. As expected, only Levy-paying employers will have access to DAS from April 2017. All other employers are expected to be using DAS by 2020.
- Levy contributions will appear in online accounts a few days after payment is made to HMRC. So employers can expect to see their payments showing in their DAS accounts from late May 2017
- The Government will provide a 10% top-up to an employer’s Levy contributions will be applied at the same time the employer’s money is credited into DAS accounts. For every £1 an employer pays into the Levy they will receive £1.10
- Levy contributions will expire 18 months after the contribution was made. Originally it was assumed they would expire after 2 years
- During the first year of operation, employers are only permitted to spend the Levy on their own staff.
- Apprenticeships which start before April 2017 will be funded in line with current models i.e. Frameworks or Trailblazer Standard funding models
- Employers don’t have to wait until they have enough funds in their DAS account to cover the full cost of an Apprenticeship before a member of staff starts training. Having enough funds to cover the skills provider’s charges for the first month’s training is sufficient.
- Payments to skills providers will be made monthly via the DAS
- Extra support will be available for employers who recruit 16-18 year olds (an incentive payment). This will be paid via their skills provider.
- Apprentices with additional needs are eligible for extra support which is funded through direct payment to their skills provider. It is expected that the provider will be responsible for identifying the additional needs and arranging funding directly with Government.
- Funding for English and Maths will be paid directly to the provider by the Government
For non Levy-paying employers
- From April 2017, all non-levy paying employers will be required to “co-invest’ in training, i.e. agree a price with a provider and then pay towards the cost of the training
- Employers will make a contribution to the cost of this training. The Government will pay the balance, up to the maximum amount of funding available for that Apprenticeship.
- Employers will pay their contribution directly to the skills provider and will be able to spread payments over the life time of the Apprenticeship. The Government will pay the balance directly to the provider
- Employers can only use approved skills providers for Apprenticeships training. There is not yet any definitive information about what an approved provider is, or the registration process.
Further information will be released in June, October and then finally in December 2016.
It’s worth noting that whilst the majority of GMLPF’s employers will not be subject to the Levy, the risk is that the introduction of co-investing means they might be put off taking on apprentices. But this scenario is counterbalanced by the view that there are few worthwhile alternatives for employers wanting to develop their workforce. And financial incentives may prove enough to keep these employers on board. The simple fact is that we don’t know how things will turn out. We can make predictions but the rules continue to be tweaked. All we can do is continue to keep up with the latest Government updates and scenario plan for potential outcomes.
GMLPF Apprenticeships Strategy Manager
For more information, please download the slides: Apprenticeship Levy Update