Apprenticeship Levy update Webinar: 05 May 2016

James HammillDirector – BPP Professional Apprenticeships

Apprenticeship Levy Update

Webinar: 08 September 2016

James Hammill

Director

BPP Professional Apprenticeships

James Hammill

Director – BPP Professional Apprenticeships

Agenda

Background 03 - 04

Apprenticeship Levy recap 05

Who can it be spent on? 06

What can it be spent on? 07

Summary: New funding information 09

New Apprenticeship Standards 10

Further updates 11

…and employers are

investing less in training

Action is needed to address current economic trends

UK productivity lags

behind other developed

economies…

3

The UK has low levels of

intergenerational social

mobility compared to

some other developed

countries

Meanwhile… relative

social mobility has

stagnated or declined

over recent decades

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

… and employers are

investing less in training

Number of employees who worked fewer hours than usual

because they attended a training course away from their

workplace

3

…and employers are

investing less in training

Why are apprenticeships the solution?

4

Structured training programme to

develop skills the employer and

employee needs

Include Professional

Qualifications/Degree/Masters

BENEFITS

EMPLOYER

Professionalised workforce

Staff development investment

Develop future skills required

Improved retention

EMPLOYEE

Career not a job

Improved lifelong earning capacity

Include Skills and Behaviours agreed

by employers

Source: GDP chart ONS, International Comparisons of Productivity, 2014.

Apprenticeship Levy recap

• Levy on UK employers will fund growth in the apprenticeship programme. In parallel, employers will be given

more influence over how apprenticeships are designed and paid for, so that they focus on the Skills,

Knowledge and Behaviours that are required of the workforce of the future.

• Growth in apprenticeships will open up opportunities to individuals from all backgrounds and all parts of the

country, giving more people the chance to pursue a successful career.

• The levy will come into effect on 6 April 2017, at a rate of 0.5% of pay bill, paid through PAYE. It applies to all

employers in all sectors.

• All employers have an allowance of £15,000 to offset against their levy liability. The levy allowance is not a

cash payment and cannot be used to purchase apprenticeship training.

• The allowance means that only UK employers with an annual pay bill of more than £3 million are liable to pay

the levy. That’s 2% of employers.

• Employers in England who pay the levy will be able to get out more

than they pay into the levy, through a 10% top-up to their digital accounts.

Who can the Apprenticeship Levy be spent on?

Employees

New to role

Existing staff –skills gap

Level of qualification

irrelevant

Aligned to an approved

apprenticeship

There are rules governing what an

apprenticeship is. The main ones are:

• the apprentice must be employed in a real

job;

• they may be an existing employee or a

new hire

• the apprentice must work towards

achieving an approved apprenticeship

standard or apprenticeship framework

• the apprenticeship training must last at

least 12 months

• the apprentice must spend at least 20%

of their time on off-the-job training

What can the Apprenticeship Levy be spent on?

Digital funds and government funding can be used for:

• apprenticeship training and assessment

• against an approved framework or standard

• with an approved training provider and assessment organisation

• up to the funding band maximum for that apprenticeship

Digital funds and government funding can not be used for:

• wages

• travel and subsistence costs

• managerial costs

• traineeships

• work placement programmes

• the costs of setting up an apprenticeship programme

Apprenticeship rebranding…staff development

New hires

School leavers

Graduates

Business as usual recruits

Existing employees

Career changes

Professionalise workforce

Returners

Management development

The Apprenticeship Levy can be used to train new hires and existing employees:

Summary: New funding information released

August 2016

• 16-18 year old incentive payment (£1000 to employer, £1000 to provider)

• Highest level of qualification held by the individual no longer a barrier

• 15 funding bands for Frameworks and Standards

• Levy payers can transfer 10% funds from 2018 to other employers

• Non-levy paying employers won’t use DAS to pay for training until 2018

• Co-investment will be 10% employer 90% government

• Government pay for English and Maths training

• Subcontracting changes

• Reduced funding for Frameworks

• Access government support for training employees whose main workplace is England

Go

vern

men

tTra

inin

g

Pro

vid

er

Paid by SFA

and balance

by employer

HMRC collect

levy (PAYE)

Employs

apprentice and

commits to

training

Provides

training to

apprentice

Timely data

on training

Employer views

funds in digital

account to

spend in

England

Check

training is

complete

If funding

unlocked:

pay provider

Registers with

SFA

Employer and Provider Identity Assurance

Pass data on levy payments from HMRC to DfE

Unused funds

expire after 18

months

Receives

training for

apprentice

Payments to

providers taken

from digital

account

Commits to

provide

apprenticeship

training

How the funding system will work

10% Top up

Levy p

ayin

g

em

plo

yer

No

n-l

evie

d

em

plo

yer

Employs

apprentice and

commits to

training

Provides info via

ILR to SFA that

training has taken

place & that

employer has

made contribution

Employer pays

for proportion of

cost direct to

training provider

Receives

training for

apprentice

SFA pays govt

proportion of

costs to the

training

provider

10

What new Apprenticeship Standards are

available?

• Over 170 Apprenticeship Standards (created by Trailblazers) currently

developing over 400 standards.

• Over 40% are higher/degree level

• 246 standards have been published

• Guidance available at: https://www.gov.uk/government/publications/future-of-

apprenticeships-in-england-guidance-for-trailblazers

• List of standards developed / in development so far available at:

https://www.gov.uk/government/publications/apprenticeship-standards-list-of-

occupations-available

When further information will be available?

October 2016

Information about apprentices starting from May 2017, including:

• Final levels of funding

• Government support

• Additional support for 16- to 18-year-olds

• English and maths payments

• Final detailed funding and eligibility rules

December 2016

Information about further employer guidance from HMRC on how to calculate and

pay the apprenticeship levy.

jameshammill@bpp.com