UK : The Apprenticeship Levy, which came into effect on 6 April, is a tax on all UK employers that will support the funding of apprenticeships. Both private and public companies that pay more than £3 million in wages are now liable to pay 0.5 per cent of their paybill into a fund. Employers can then use this fund – to which the government adds an extra 10 per cent (in England) – to spend on apprenticeship training.
“All key stakeholders agree that there needs to be a far greater investment in skills and knowledge acquisition programmes across the UK workforce. In order to meet key skills gaps and shortages, emerging and future technologies will ensure that the UK improves its productivity and supports growth and social mobility,” says David George, apprenticeship standards and frameworks manager at not-for-profit employer-led skills organization Semta. He’s been involved in developing new apprenticeship standards for a variety of industries including automotive, aerospace, maritime and defence. By 2020, the government hopes to have created three million apprenticeships.
How will it work?
Companies pay the levy through PAYE on a monthly basis. Each employer has an allowance of £15,000 to offset against their levy payment – which will work in a similar way to the personal tax allowance, says Mr George. Approximately 1.3 per cent of UK employers will be liable to pay the levy. Companies will have 24 months to make use of their apprenticeship funds.
How will this levy change apprenticeships?
New apprenticeship standards and increased funding from the levy will give employers more control over designing training to suit their requirements, the government hopes. The levy will help double the annual level of spending on apprenticeships to £2.5 billion by 2019-2020, compared to 2010-2011 levels. To date, over 215 “Trailblazer” groups, involving more than 1,400 employers, have developed over 490 new apprenticeship standards. 157 of these are now approved for delivery.
Who will benefit?
These reforms mean the government will now fund apprenticeships for all ages, including existing staff if they wish to upskill via an apprenticeship, as well as those aged 16 to 18, where funding was targeted in the previous system. “So companies can now review and put in place training plans to develop their whole workforce,” says Mr George. Employers and providers training 16 to 18-year-olds or 19 to 24-year-olds leaving care or who have a Local Authority Education and Healthcare plan will receive an extra £1,000 per person.
Will all apprenticeships cost the same?
No – there are 15 different bands of funding available ranging from £1,500 to £27,000. Engineering and technology-focused apprenticeships tend to be more expensive, and in the higher bands.
Additional funding will be available to support apprentices to meet minimum requirements in maths and English.
What kind of apprenticeships can firms offer?
A range of levels, from a semi-skilled operator (level 2) through to a postgraduate engineer (level 7). Over the last few years, government and employers have worked to reform apprenticeships to try to make them more rigorous, better structured and more in tune with what employees want.
What about employers who don’t pay a levy?
Employers whose pay bill is less than £3 million a year won’t need to pay the levy. While 90 per cent of these companies’ apprenticeship training costs will be paid by the government up to the funding band maximum, employers will pay 10 per cent towards costs for those aged 19 and over. For smaller companies with fewer than 50 employees, the government will pay all the costs for new apprentices aged 16 to 18 and also for those aged 19 to 24 who are leaving care or have a Local Authority and Healthcare plan. Next year, employers might be able to target a proportion of their levy funds to pay for smaller companies in their supply chain to train employees, says Mr George.
How will employers find a training provider to support their apprenticeship training?
A Register of Apprenticeship Training Providers has been set up by the government to help employers find and compare training providers who are approved to deliver the new apprenticeship standards.
What are the issues?
Out of the 500 organisations recently surveyed by training experts City & Guilds, just one in three of the employers who were due to pay the levy were unaware of it. Few employers understand the huge range of training this could offer. “Of course with any major reform programme there will be some challenges to overcome, including getting the message out there to employers about the new apprenticeships and the opportunities to develop the whole of the workforce,” says Mr George. “But the government has already demonstrated, through the work we have done with employers in advanced manufacturing and engineering sectors, that there is a willingness to work in partnership to ensure that the new apprenticeships in our sector are robust and fit for purpose.”
Note : Published in public interest and taken from the write up contributed by Helena Pozniak to Telegraph