The Apprenticeship Levy

The Levy is part of a broader programme of reforms The government is committed to significantly increase the quantity and quality of apprenticeships in England to reach 3 million starts in 2020: New Institute for Apprenticeships led by employers to support quality apprenticeships Employers at the heart of designing new Apprenticeships Standards through the Trailblazer programme Apprenticeships will be given equal legal protection to degrees Abolishing employer NICs for apprentices under the age of 25 from April 2016 Apprenticeship targets for public sector bodies – consulting on new duty on public sector to have 2.3% of its workforce comprised of apprenticeships But a step change in the scale and quality of the apprenticeship programme also requires a step change in funding.

The Spending Review set the rate and scope of the levy The levy will be 0.5% of paybill, paid through PAYE An allowance of £15,000 Levy paid on paybill in excess of £3m (2% of UK employers) Employers in England who pay the levy and are committed to apprenticeship training will be able to get out more than they pay into the levy, through a top-up to their digital accounts

How the Levy will work Government Training Provider Employer Receive training for apprentice Redeem “vouchers” Our objectives: Employer control and simplicity Our objectives: Get the machinery right to provide a quality service while protecting public purse HMRC collect levy (PAYE) Employ Apprentice Offer apprenticeship training Receive vouchers (Digital Service) Timely data on training Pay for training with “vouchers” Employer has online account Provide training to apprentice Check training is complete If funding unlocked: Pay provider Register with SFA (Ofsted) Employer and Provider Identity Assurance Pass data on levy payments from HMRC to BIS Unused vouchers expire Top up

Next Steps High Level Scope HMRC published draft clauses for levy legislation BIS publish levy policy document BIS publish levy Employer Guide Operating Detail BIS publish draft funding rates SFA publish draft funding rules Transition arrangements Transition BIS/publish final funding rates SFA publish final funding rules SPRING 2016 AUTUMN 2016BY END 2016

Are you Ready for the Levy?

7 | Delivering our priorities for Apprenticeships How much is my Levy? Estimate how much your annual Levy will be – Monthly payroll (basic pay, overtime and bonuses exc NI) of staff resident in England – Temporary labour NOT on your payroll do not contribute to the Levy Estimate how much your current apprenticeship programme costs per annum – Contact your training provider for exact figures, estimate 3-4k for year old, k for an adult Calculate the gap

8 | Delivering our priorities for Apprenticeships How can I spend my Levy? Existing workforce – Workforce Development Planning New recruits? Look at all aspects of the business – logistics, warehousing, administration, sales and of course food manufacturing! Instead of recruiting graduates, recruit Higher/Degree Apprentices Management Training

9 | Delivering our priorities for Apprenticeships How can I spend my Levy (2) Can you support your supply chain or other partners? Offer year long secondments to other parts of the business for existing staff and support this with an apprenticeship Get involved in developing new apprenticeship standards Be innovative!

10 | Delivering our priorities for Apprenticeships How can I off set some of the cost of the Levy? Explore the feasibility of carrying our some of the training yourself – enabling the potential to be funded for this part of the apprenticeship (e.g. on the job assessment) Form a Group Training Association (GTA) to enable collective ‘buying power’. Can existing non apprenticeship training be displaced by an apprenticeship? (e.g. CIPD HR qualifications are part of an apprenticeship) An alternative approach to temporary staff

Questions?