Are you ready for the Apprenticeship Levy?

The Apprenticeship Levy is coming! But what does that mean? From 6th April, new legislation will take effect requiring businesses with an annual payroll in excess of £3 million to pay 0.5% of their paybill to help fund new apprenticeships.

The Levy is a government initiative to increase the quality and quantity of apprenticeships –  developing vocational skills and helping to address the widening skills gap while they’re at it. All being well by 2020 there will be an additional 3 million apprentices in the workplace.

Skills to pay the bills

If it sounds like a bit of a bind for employers, it shouldn’t. Employers will have access to an online account and will receive an allowance of £15,000 to offset against their levy payment and, ultimately, all employers (and employees) stand to benefit.

As the government says in their official guidance: “Employers who are committed to training will be able to get back more than they put in by training sufficient numbers of apprentices.” Put simply, it’s a timely opportunity to reassess your hiring strategy.

The State of Play

According to totaljobs’ latest research, an impressive 89% of employers say the new scheme will encourage them to take on apprentices.  Our research also found that:

  • 48% of businesses already say apprenticeships provide a great way to get people into their industry
  • 27% say apprentices are necessary to help their business grow
  • 30% of businesses say the amount of apprentices they plan to take on between July 2016 and 2017 is higher than in previous years

Jobseekers feel similarly positive about apprenticeships:

  • 36% of jobseekers would consider an apprenticeship
  • 49% would consider a degree apprenticeship in the next five years
  • 47% said the option to ‘earn as you learn’ is one of the biggest attractions
  • 34% of jobseekers would choose an apprenticeship over going to university

Advice from the National Apprenticeship Service

The National Apprenticeship Service (NAS) says there are things employers can be doing now:

  • Start planning how your business could use apprenticeships.
  • Read the updated guide for employers on paying the levy, accessing the apprenticeship service and paying for apprenticeships in future.
  • Use the online tool for employers to calculate your levy contribution, begin to plan your training and estimate what you will have available to spend on apprenticeships.

The NAS also has sound advice for employers about how the Levy works:

In their guidance, the NAS also make clear that the introduction of the Apprenticeship Levy will be accompanied by other changes to apprenticeships.  If you are a UK employer, or group, with a pay bill of less than £3million then you will be classed as a non-levy paying employer. In England, the government will pay 90% of your apprenticeship training and assessment costs. You will cover the additional 10% as well as any additional costs you agree with your chosen apprenticeship training provider. 

The NAS add that the government is offering additional support to organisations with fewer than 50 workers by paying the full cost (100%) of training and assessment costs for their apprentices aged 16-18 and for those aged 19-24 formerly in care or with a local authority education, health and care plan.

The Levy operates across the UK, arrangements are in place for those employers that operate in Scotland, Northern Ireland and Wales.

These funding changes come in to effect from 1st May 2017. Take a look at GOV.UK for Apprenticeship reforms: information for employers and take action today.

Harnessing Apprenticeships

By levying all companies of a certain size, the government hopes to increase the number of apprentices across sectors and levels. So our research should provide some reassurance to those businesses and industries less accustomed to tapping this particular talent pool. The jobseekers are there and they’re willing.

As with all new initiatives, it’s going to take a while for the advantages to make themselves known, so perhaps it’s not surprising that only 12% of the jobseekers we surveyed said they had been made aware of apprenticeships through advertising, while only 9% said they had been made aware through job centres or by word-of-mouth through their parents. Only 13% had heard about the opportunities through schools.

Apprenticeships bring many benefits. For employers it’s the chance to ensure they have the necessary skills developed in-house to meet business needs and an enhanced ability to stay nimble in planning for the future.

Apprenticeships are also a good way of developing and shaping employer brand. Great people want to work for great companies: by weaving a respected apprenticeship programme into the fabric of your company, brands can further build trust and respectability.

Safeguarding The Future

The latest ONS figures show that we are in the lowest period of unemployment in over decade. So how do we maintain the status quo while ensuring future hiring needs are met? There is not one answer, but growing talent among the next generation through apprenticeships is fundamental in laying a strong foundation for continued jobs growth.

Everyone has different skills and University won’t be the right option for all; nor can University alone equip the workforce with the many and varied skills it needs to succeed.

That being the case, it really is good news that our research has shown such tremendous enthusiasm for apprenticeships.

Read more in the February edition of our Totaljobs Employment Index. For advice to employees, read our 10 apprenticeships myths busted article.

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