Since its implementation in 2017, the apprenticeship levy requires any employer with a pay bill over £3 million each year, to set aside 0.5% of their payroll for training.
The levy can be used towards the cost of Apprenticeship training and end-point assessment with an approved training provider. It can’t be used to fund an apprentices’ wages or on a wider training programme.
The levy is paid through HMRC and any payer who does not spend or transfer their funds within 24 months, will have their expired funds removed from their National Apprenticeship Service account.
Funds are provided once the employer has agreed to buy an apprenticeship training from a provider, monthly payments are then transferred automatically from a digital account and sent to the provider. This cost is then spread across the lifetime of the apprenticeship.
When created, the levy was billed as a way to create 3 million apprenticeships by 2020 and improve the UKs poor productivity records, however this seems an unachievable target now in mid-2019.
Anne Milton at the AELP Conference in June 2019 stated ‘49% of apprenticeship starts have been paid for with levy pots’ – but what about the other 51%? Does this mean that employer’s money is going to waste, or have they invested their levy funding into further training for those already employed as a way of upskilling and expanding their original workforce?
The levy was designed to encourage skill growth and boost productivity, by investing in new or current staff and upskilling, businesses are able to bridge the skills gap whilst boosting social mobility though apprenticeships.
Anthony Impey, The National Federation of Self Employed & Small Businesses apprenticeships and skills policy chair, writes ‘skills are vital to unlocking productivity and driving growth in small businesses which are the backbone of the UK economy’ whilst Anne Milton said she was ‘mindful’ of getting small employers onto the apprenticeship system right, so how do we get employers onboard and spending their levy?
Before you choose an apprenticeship as an employer, you should know:
- Look at the apprenticeship standards available and see if there are appropriate apprenticeships to meet the needs of your business
- If your funds don’t cover the full cost of the apprenticeship training, see if there is government funding and help available to your organisation
- If your apprentice required additional Maths and English support this is funded on top of your levy funding and NOT taken from your apprenticeship levy funds.
Delegates at the AELP Conference were also told by ESFAs Keith Smith, that the funding rule that is preventing large employers from transferring levy funds to smaller employers, to train 16 to 18-year-old apprentices is being reviewed. Currently, the apprenticeship funding rule E189 states that ‘transfer of funds will not take place where the receiving employer is eligible for full government funding, because they have fewer than 50 employees and the apprentice is 16-18 years old or an eligible 19-24-year-old.
This would be particularly helpful to those larger levy paying employers who would benefit from sharing their levy pot with smaller subcontractors and micro supply chain partners. At the moment this is not allowed, however Smith confirmed ‘I think we’re looking at it, it is one of those things again which I’m hoping quite soon we’ll come out with something.’