Interesting afternoon spent listening to some excellent speakers at the Westminster Employment Forum Apprenticeship SeriesFunding apprenticeships in England – supporting employers, meeting demand and the future of the apprenticeship levy.

Along with the recent AELP conference and many other events, it is evident that there is a perceived gap between Government Policy on apprenticeship levy and its implementation by training providers and employers. This is not a new phenomenon in that there is a wide history of government skills policy being perceived as out of line with the needs of employers and training providers. It is fair to say that there will always be a gap between the commercial drivers of employers and training providers and the societal needs that government must address in terms of social mobility and upskilling the nation’s workforce.

We have heard about the perceived barriers to the reduction in starts ranging from the failure of employers to understand apprenticeships, the 10% joint contribution, 20% of the job training, lack of standards, lack of EPA organisations and the lack of assessors to undertake the EPA. The response by Government to these issues undoubtedly will not be rapid. Almost everybody in the sector accepts that the levy can only be a positive policy for to enable the increased investment in skills, so why would any provider wish to deliver apprenticeships with all these barriers in place. We are working with many clients who despite these barriers are achieving great things for the apprentice, the employer and themselves. So, what is that they do that has enabled their success? Our observations through working with them would suggest that:

  1. Their mental mindset is that they see the new apprenticeship reforms as an opportunity rather than a barrier.
  2. Their prime focus is on giving the apprentice the best learning opportunity they can give and creating attractive progression routes.
  3. Their business development activities are based on not just being a supplier to the employer but becoming a critical partner in delivering the employer’s business objectives.
  4. They create an apprenticeship programme in close collaboration with the employer ensuring the employers are as supportive to the apprentice as possibly they can

One of the delegates asked the panel at the conference what needs to be done to move the levy from being a transactional policy to transformational policy. We truly believe that many of our clients are acting through the levy in a transformational manner. If you need any support in making your apprenticeship delivery transformational please get in touch with us  at grow@leadershipteam.info.

According to official figure published in the last two weeks the new apprenticeship levy is yet to increase the number of people being trained, and employers’ groups has said that the government had failed to act on mounting concerns about changes to the apprenticeship system.

However, whilst a lot of the concerns raised are valid it might be worth employers taking a step back to think about how you can get the best out of your apprenticeship programme.

To help you we have put together 5 tips for running a successful apprenticeship programme:

1. Set the tone at the top – the senior team needs to believe in it or else there is small chance of success. Similarly the organisation as a whole needs to buy in and accept that apprentices are an integral and valuable part of the business.

2. Get your recruitment right – It is essential that anyone involved in apprentice selection understands the apprenticeship scheme, knows the type of candidate and the qualities and competencies they are looking for, uses clear job descriptions to make good objective hires.

3. Get a strong training framework – Once you have recruited the apprentice the next important consideration is who and how they will receive the training to support the Apprenticeship. Remember, employers who pay the levy have the power to ensure that they receive the right service from the training provider (private, college or university) that they choose to provide the delivery of the education and learning part of the apprenticeship programme. Strong liaison between the employer and the training provider is absolutely critical.

4. Give apprenticeships opportunity – there is nothing worse for an apprentice to feel that they are just a number, or worse an inconvenience. Like all of us they need to feel valued and encouraged to develop their skills and use their training within the apprenticeship programme

5. Create a strong support system – This is of vital importance both for the organisation and the apprentice. Providing the right practical support and guidance to an apprentice will help ensure they settle in well, develop with your organisation and help contribute to the success of your business. Practical elements of support should include:

  • giving apprentices a clear outline of expectations and a safe supportive environment to learn and develop
  • encouraging them from the start to own and drive their programme targets and to seek regular feedback to self-assess their performance
  • up-skilling and developing line managers so they can coach their apprentice and act as a role model
  • putting a workplace learning mentor in place to further enhance the experience, adding and creating a proactive environment that builds on their eagerness, motivation and commitment.

In summary the above tips are some of the key considerations that employers should take into account when they are looking to develop apprenticeships that will deliver long term value for the business.

For more information contact The Leadership Team today.

In our last blog update we explored the following area of concern: what happens if the levy pot is overspent?

To support that, we have produced this handy info-graphic so that you can clearly see some examples of how much the Apprenticeship Levy costs different businesses.

apprenticeship levy infographic

It is fair to say that there is still a lot of confusion among employers about the mechanics of the Apprenticeship Levy. One area of concern, and particularly relevant to smaller levy paying employers, is what happens if the levy pot is overspent?

For example, those who are only paying a marginal levy might not have enough funds in their ASA account to cover the cost of training and assessment for all the apprentices they want to take on.

Just to remind you: only companies with a payroll of over £3 million will pay in to the levy, so for example if your annual payroll is £5,000,000 then you will pay 0.5% of anything over £3,000,000 – £10,000 – into the levy pot.

So what’s happens if you don’t have enough in your levy pot, as your training requirements are far in excess of the £10,000 in the above example?

Well the answer is co-investment – and this occurs when a levy payer simply runs out of money in their digital account (the pot).

The employer will then be able to use the model that applies to non-levy payers, meaning the employer will have to pay 10% of the remaining training costs to the training provider while the government will then pay the remaining 90%.

Below are some examples of how much the levy costs for differing size businesses:

Employer A: 1,000 employees, each with a gross salary of £20,000

Annual pay bill: 1,000 x £20,000 = £20,000,000
Levy applied: 0.5% x £20,000,000 = £100,000
After allowance* (Employers get a £15,000 fixed annual allowance to offset against the Levy payment) applied: £100,000-£15,000 means £85,000 Levy payment

Employer B: 500 employees, each with a gross salary of £20,000

Annual pay bill: 500 x £20,000 = £10,000,000
Levy applied: 0.5% x £10,000,000 = £50,000
After allowance applied: £50,000 – £15,000 means £35,000 Levy payment

Employer C: 100 employees, each with a gross salary of £20,000

Annual pay bill: 100 x £20,000 = £2,000,000
Levy applied: 0.5% x £2,000,000 = £10,000
After allowance applied: £10,000 – £15,000 means £0 Levy payment

Dear CEO,

A recent PWC article stated that there are four concerns that keep CEOs awake at night. They cited the concerns as, how to deal with globalisation and uncertainty; a lack of trust in their business or brand, the need to rethink the leadership model, and, tackling the talent challenge.

It is this final point I would like to draw your attention to as we all know that the competition for talent is getting fiercer and that skill shortages are a real hindrance to business growth.

You have a choice to either hire in new talent or look to develop your existing workforce. Of course, you may need to hire a specialist with skills and qualifications that you don’t have inhouse but very often our own staff have skills and expertise that is overlooked or, more importantly they have the potential to develop if given the appropriate training and development.

That training and development can be supported and enhanced by taking advantage of the Apprenticeship Levy. However, of the estimated 22,000 businesses that pay the levy, only half (50%) have actually set up the framework (nominal digital account). It could be that the information about the Levy is sitting in the intray of the FD or HRD but the clock is ticking.

Has your organisation set up it’s digital account? If not, perhaps take a look at our blog post on “What is the Apprenticeship Levy?

Few employers understand the huge range of training this could offer nor the financial benefits of taking advantage of the Levy.It is clear that there have been issues getting the message out there to employers about the new apprenticeships and the opportunities to develop the whole of the workforce. Hopefully this letter will help you in making the right decisions around your workforce development.

Wishing you a successful remainder of 2018.

Yours,

The Leadership Team

The Apprenticeship Levy can come across as confusing and a little daunting if you don’t fully understand the details surrounding it. To help you gain a better understanding, we have put together an Apprenticeship Levy Myth-buster.

All businesses must pay the apprenticeship levy.

No, only employers that pay more than £3m in wages are liable to pay the apprenticeship levy. Levy-paying employers contribute 0.5pc of their payroll into a fund each month, which can be re-invested in apprenticeship training for their business. And for every £1 contributed, the government adds 10p. And also, if you’re an employer with an annual pay bill under £3m then you don’t pay the levy – but the government will still fund 90pc towards the cost of your apprenticeship training.

Aren’t Apprenticeships for 16 -24 year olds? I don’t want young workers, I need experience.

Not at all, anyone can start an apprenticeship at any point in their life, whatever their age, background or career level. With levy funds, employers can train and upskill their existing workforce as well as hiring new recruits. Also you can use the levy funds to train existing employees who hold prior qualifications so long as the apprenticeship they are taking is relevant to their role and the most appropriate way of progressing or developing their career.

Apprenticeships are no use to my organisation as we do not employ manual workers – we are a tech company.

This might once have been the case, however, apprenticeships are now available in over 1,500 occupations across 170 industries, ranging from nuclear, banking to cyber security.

I have to spend all my apprentice levy funds myself.

No not necessarily. You can transfer up to 10% to your supply chain.

As an employer it seems to me that the Levy will mean I have less control my training requirements.

The levy makes it easier for employers to choose apprenticeship training that best suits their needs. Funding follows employer choice and this is different from previous models and forces training providers to become more responsive to employer needs. Employers’ levy contributions are paid into an apprenticeship service account which allows them to choose and pay for apprenticeship training more easily. If an employer is in a group of companies paying the levy together, the group can collect their funds into a single account.

To find out more about the Apprenticeship Levy, click here.

In short, what is the Apprenticeship Levy?

Gov.uk describe it simply, the Apprenticeship Levy is a levy on UK employers to fund new apprenticeships.

Who does it apply to?

It will be applied to businesses with annual pay bills in excess of £3 million, and the levy will be applied across all sectors.

How much is the levy likely to be?

The levy will be charged at a rate of 0.5% of an employer’s payroll. Each employer will receive an allowance of £15,000 to offset against their levy payment.

How is the levy collected?

It will be collected by the HMRC monthly via Pay As You Earn (PAYE).

Where is this allowance paid into?

After the levy is collected via PAYE, it then becomes accessible by the employer via a digital account service. The employer can then use the account to pay for apprenticeship training.

I am a levy paying employer, how do I access the digital account service?

You can sign-up and access your Apprenticeship Levy Service here.

What can we use the digital account service for?

The digital account allows you to:

  • receive levy funds for you to spend on apprenticeships
  • manage your apprentices
  • pay your training provider
  • stop or pause payments to your training provider

What can we use the allowance for?

You can use funds in your digital account to pay for apprenticeship training and assessment for apprentices that work at least 50% of the time in England.

How do we spend our allowance?

Once logged into your digital account you can select the ‘Find apprenticeship training’ to find approved apprenticeship training providers. You will then liaise with your chosen training provider to determine a prices and payment schedules.

Once you agree and the training has started, monthly payments will be taken from your digital account and sent to the training provider.

What if there is not enough money to pay for training one month?

If you don’t have enough funds in your digital account to pay for training in a particular month, you will be asked to share the remaining cost of training and assessing your apprentices for that month with the government. This is called co-investment.

This co-investment means that you will pay 10% of the outstanding balance for that month, and the government will pay the remaining 90% up to the funding band maximum. If your costs go over the maximum, then you must pay the difference out of your own budget.

What are the funding bands?

You can find full details of the funding bands and their maximums here.