Apprenticeship Levy: taking stock

No-one can fail to notice that Apprenticeship Levy updates are coming through thick and fast now. Whilst it is good to finally start getting information through, we are still missing the critical detail behind the proposals published by BIS on its website on the 21st April.

Having attended an FE Week event hosted by Gordon Marsden MP, Shadow Skills Minister earlier in the week, it’s clear that he is none the wiser either!

In the opening speech at the event, Marsden made it clear that the Labour party is very much in favour of the Levy. It’s seen as a way of providing funding for Apprenticeships and an opportunity to address quality under the steer of employers who will be more involved than ever before.

The main thrust of Marsden’s speech echoes was what we’ve all been saying: that we need to know the devil behind the detail. Other speakers at the event included Martin Doel (AoC), Gemma Gathercole (Head of Policy – OCR), Mike Cox (AELP) and chair for the afternoon Nick Linford (FE Week).

Mr Marsden went on to express his concerns that that it’s not clear where the figure of 3m Apprenticeship starts has come from or even the £3bn that the Levy is claimed to raise. He also confirmed that no agreement has been reached with devolved governments about what their share of the total £3bn pot will be.

What is crystal clear is that skills providers are going to have to be prepared to react quicker than ever before with the introduction of the Apprenticeship Levy.

One view aired at the event was that Apprenticeship Levy is clouding Apprenticeship policy. All conversations with employers, providers and colleges around Apprenticeships are purely focusing on the Levy and primarily what we don’t yet know! Because so much is still unknown, there is an awful lot of speculation, second guessing, and dare I say it, catastrophising.

The biggest issue in my opinion at the moment is the impact on small and medium sized enterprises, who will for the first time have to contribute cash towards the cost of Apprenticeship training. This may be reclaimed in the form of an incentive, and as with some of the Trailblazer Standard funding bands, employers may be able to get back more out of the system than they put in.

As a sector what we cannot afford to do is shy away from this challenge. We are, after all, just 11 months away from the proposed introduction of these changes.

We now need to start having conversations with employers of all shapes and sizes and put plans in place ahead of introduction of the new funding models from 6th April 2017. These conversations may well be challenging and keeping an open mind, and listening to employers’ concerns is crucial to keeping them on board with the Apprenticeships programme.

Some cope better than others with change and there will of course be winners and losers. But the sector’s had plenty of practice at dealing with change: remember the introduction of core skills, key skills, and functional skills? We have to remain mindful of the opportunity to be found in change.

We could stress over timescales but better to pour our energy into shaping conversations with all stakeholders to make them aware of the changes, and to plan a future course of action agreeable to all.

Gareth Jones
GMLPF Apprenticeships Strategy Manager

Apprenticeship Levy Latest

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.

Gareth Jones
GMLPF Apprenticeships Strategy Manager

For more information, please download the slides: Apprenticeship Levy Update