1. The Apprenticeship Levy Beeby Bell Quality & Compliance Manager Working in Partnership with:

2. A 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 through: Establishing a new Institute for Apprenticeships led by employers to support quality apprenticeships Placing employers at the heart of designing new Apprenticeships Standards through the Trailblazer programme Giving Apprenticeships the same equal legal protection to degrees Abolishing employer NICs for apprentices under the age of 25 from April 2016 Establishing Apprenticeship targets for public sector bodies – consulting on new duty on public sector to have 2.3% of its workforce comprised of apprenticeships The Apprenticeship Reform Programme

3. A Programme of Reforms “But a step change in the scale and quality of the apprenticeship programme also requires a step change in funding, and this is being brought about through the introduction of an apprenticeship levy” The Apprenticeship Reform Programme

4. The levy on all UK employers is part of a broader programme of reforms and will be used to fund new apprenticeship starts from April 2017. The levy applies to all UK private and public sector employers, including those operating under other levies. Any UK employers with a pay bill of more than £3 million per year is liable to pay the levy. The levy will be 0.5% of the pay bill, paid through PAYE. What is the levy?

5. An allowance of £15,000 will offset against levy liability. The levy allowance is not a cash payment and cannot be used to purchase apprenticeship training. Employers in England who pay the levy will be able to get out more that they pay into the levy, though a 10% top-up to their digital accounts. What is the levy?

6. From 1 st April 2016, there will be two types of employer in apprenticeship terms A levy paying employer: Has to have a pay bill in excess of £3m Can be based anywhere in the UK Will be levied at 0.5% of pay bill through PAYE Will pay for training and assessment of apprentices through a new Digital Apprenticeship Service (DAS) Will choose which provider and which assessment body they want to use A non-levy paying employer: Has a pay bill less than £3m Will have to contribute towards the cast of training & assessment of apprentices – current model third/two third basis Will choose which provider and which assessment body they want to use Will pay the training provider direct for their contribution

7. LEVY PAYING EMPLOYER Employer of 250 employees, each with a gross salary of £20,000. Pay bill: 250 x £20,000 = £5,000,000 Levy sum: 0.5% x £5,000,000 = £25,000 Allowance: £25,000 - £15,000 = £10,000 annual levy payment NON-LEVY PAYING EMPLOYER Employer of 100 employees, each with a gross salary of £20,000. Pay bill: 100 x £20,000 = £2,000,000 Levy sum: 0.5% x £2,000,000 = £10,000 Allowance: £10,000 - £15,000 = £0 annual levy payment Paying the Levy - Two worked examples

8. How Apprenticeships will work for Levy paying employers Employers will continue to negotiate the best price for the training that they require directly with training providers. 100% of this price for apprenticeship training, assessment and certification costs are funded from the levy. Levy funds, the levy allowance plus 10% top up payments will be applied monthly to the employer’s digital account.

9. How Apprenticeships will work for Levy paying employers Levy payments and top up payments expire at the end of 18 months unless they are spent on apprenticeship training. These employers will management the apprenticeship programme including funding and payments through the Digital Apprenticeship Service (DAS) from April 2017. Providers will be paid monthly via the employer’s digital account after the levy is introduced.

10. How Apprenticeships will work for Non-levy paying employers Employers with a pay bill of less than £3m will not have to pay the levy. This is more than 98% of all employers. Non-levy paying employers will: Agree a price with their chosen training providers for delivery of training and assessment Continue to have access to government funding to support apprenticeships and will be expected to make a financial contribution to the cost of training their apprentices. The employer contribution level has not yet been set. Pay their contribution towards the costs of the training and assessment direct to their training provider. Have access to the digital apprenticeship service enabling them to search for a standard or framework, find a training provider and post apprenticeship vacancies.

11. Co-Investment – levy paying and non Levy paying employers From the 1 st April 2017, there will be two types of employers who will be required to contribute outside the levy towards the costs of their apprenticeships training: 1)Employers who have not paid into the levy (i.e. any employer <£3m payroll) ; and, 2)Levy paying employers who have used all of the levy contribution and the top up funds in their digital account and wish to spend more on additional apprenticeship training If an employer needs additional funding to deliver their apprenticeships, co- funding will be available from Government. These employers will be required to co-invest proportion of funding towards the cost of their apprenticeship training. Levy paying employers who have agreed a cost which is greater than the funding cap for a particular standard or framework will pay all of the additional costs over the cap.

12. Government Training Provide r Levy Paying Employer Paid by SFA and/or employer Our objectives: Get the machinery right to provide a quality service while protecting public purse HMRC collect levy (PAYE) Employs Apprentice. Commits to training Offer apprenticeship training Provides monthly ILR Timely data on training Receives training for apprentice Employer views levy funds in digital account Provides info to SFA that training has taken place & employer has made contribution Check training is complete If funding unlocked: Pay provider Register with SFA Employer and Provider Identity Assurance Pass data on levy payments from HMRC to BIS Unused levy funds expire after 18 months SFA draws down levy funds monthly 10% Top up Provides training to apprentice Employs Apprentice. Commits to training Receives training for apprentice Employer payment for proportion of cost direct to training provider SFA pays proportion to the training provider Non-Levy paying Employer How the Levy will work from the 1 st April 2017?

13. Next Steps SUMMER 2016 AUTUMN 2016APRIL 2017BY END 2016 BIS/DfE publish provisional funding cap/ bands in June Further advice on eligibility and scope of apprenticeship funding from April 2017 BIS/DfE publish confirmed funding rates Skills Funding Agency (SFA) publish provisional funding rules ITB consensus consultation conducted SFA publish confirmed funding rules Full set of confirmed funding guidelines published Digital Apprenticeship Service registration opens Digital Apprenticeship Service (DAS) in operation Apprenticeship Levy operational through PAYE system Institute for Apprenticeships in place

14. How can we help? Free employers guide Follow us on the Gen2 website: http://www.gen2.ac.uk/employers/apprentice levy/ Book a levy appointment

15. Questions please