What is the apprenticeship levy?

WHY IS THERE A LEVY?

It’s a way of urging employers to provide more apprenticeships and invest more in on the job training for new and existing employees by making them pay in advance.

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By 2020 the government wants to create three million apprenticeships. Companies receive an allowance of £15,000, and if they don’t use the money or training after two years, it goes back into government coffers.

HOW DOES IT WORK?

From April 2017, larger employers (who pay staff more than £3 million overall every year) started paying 0.5 per cent of their annual pay bill into a government pot. They’re able to use this money to fund apprenticeships, either to create schemes for new staff or to train up existing employees. Smaller companies can also have access to these funds for apprenticeship schemes but now must pay 10 per cent of the apprenticeship bill. Smaller companies with fewer than 50 employees don’t have to pay for new apprentices aged 16 to 18.

WHAT OTHER REFORMS ARE THERE?

Currently, hundreds of old style apprenticeships, called “frameworks”, are being overhauled and replaced by fewer new style “standards” which are being developed by groups of employers (called “trailblazers”). These mean apprentices are assessed at theend of their training rather than by coursework during the scheme and that employers have had more say in what

apprentices actually learn – ideally skills that are more relevant and can be transferred between different sectors or different job roles. It also means that apprentices won’t necessarily take other qualifications alongside the apprenticeship itself.

Careers advisers say reforms mean that intermediate (levels 2-3) apprenticeships might be more rigorously assessed, but this is still up in the air.

There are many new standards, from butcher to management consultant (see www.instituteforapprenticeships.org/apprenticeship-standards for a full list).

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DO REFORMS MEAN THAT MORE AND MORE PEOPLE ARE TAKING APPRENTICESHIPS?

Not yet. Since the levy was introduced, numbers of people starting apprenticeships has actually dropped.

Some employers struggle with a new regulation that says apprentices must spend 20 per cent of their working week in off-the-job training or say they find the new funding rules difficult to deal with.

Some companies are using apprenticeships internally to “convert” existing staff (source Sutton Trust) rather than train up new employees.

WHAT DOES THE GOVERNMENT SAY?

New apprenticeships should give employers more control over designing training to suit their needs. The government wants the levy to help double the annual level of spending on apprenticeships to £2.5 billion by 2019-2020.

IS IT ALL BAD NEWS?

Not at all. “There are fantastic apprenticeship opportunities, and employers tell us that they often struggle to recruit the talented young people they need for these roles,” says Kirstie Donnelly, managing director of City & Guilds.

WHAT NEXT?

After a shakeup to the careers advice provided in schools and colleges, schools must now (January 2018) give providers of technical education and apprenticeships an opportunity to talk to all pupils.