1. Housing People The social housing training and development forum
Apprenticeship Levy
Christian Spence
Head of Research & Policy
Greater Manchester Chamber of Commerce

2. Apprenticeship Levy What is the Apprenticeship Levy?
What is it? Will you pay? How much will it cost?
Why has it been introduced?
Productivity crisis, employers lack of human capital investment
What are the implications for employers?
How do you draw down funding? What happens if I don’t pay the levy?
Are there any risks?
Will it work? Will employers engage? Will it support the workforce?
Questions & Answers

3. Apprenticeship Levy What is the Apprenticeship Levy?
Announced at Summer Budget 2015
It is a Levy on employers to fund new apprenticeships
The Levy will be charged at a rate of 0.5% of an employer’s total pay bill
wages, bonuses, commissions, pensions contributions
it is not charged on benefits in kind (company cars, health insurance, childcare, etc.)
Each employer will receive an allowance of £15,000
Only employers with total pay bill of >£3m p.a. will be charged
The Levy will be introduced from 6 April 2017

4. Apprenticeship Levy
Why has it been introduced? “Our apprenticeship levy will boost our economic productivity, increase our skills base and give millions a leg up on the ladder of opportunity - over 90% of apprentices currently go into work or further training. Making Britain a world leader on apprenticeships is essential if we truly want a country that works for everyone.” Robert Halfon Skills Minister

5. Labour Market QES Recruitment
Source: GMCC QES Q3 2016
Source: GMCC QES Q3 2016

6. Labour Market QES Recruitment & Investment in Training
Source: GMCC QES Q3 2016
Source: GMCC QES Q3 2016

7. Apprenticeship Levy What are the implications for employers?
For all employers:
Levy administered by HMRC as part of RTI PAYE system
First payment by 22 May for April payroll
For Levy payers:
Total funds in employer’s digital apprenticeship service account are:
Employer’s calculated Levy (0.5% of Total Pay Bill - £15,000)
Government top-up (10% of employer’s contributions)
Funds in digital account expire after 24 months (was 18 months)
Ability to transfer up to 10% of funds in digital account to other employers in the supply chain, sector or ATAs from April 2018
If an employer spends their annual allocation, government will co-invest additional apprenticeships by 90%

8. Apprenticeship Levy What are the implications for employers?
For non-Levy payers:
The digital service will be available from 2018 and fully by 2020 (but co-investment and new funding bands begin in April 2017)
Government will co-invest 90% of training of assessment costs

9. Apprenticeship Levy How does the system work?
All apprenticeship standards and frameworks (to be phased out by 2020) are allocated to one of 15 bands
These have different upper limits, ranging from £1,500 to £27,000
The upper limit caps the maximum amount of digital funds a levy payer can use towards an apprenticeship
Also caps the amount that government will co-invest
Employers can negotiate with training providers and assessors on price
Register of accredited training providers and assessors to be created

10. Apprenticeship Levy Are there any risks?
90% co-funding is very generous
Likelihood of employers negotiating on cost is low
Last decade has seen a large increase in volume, but
High numbers of level 2s
Focused on over-25s
With accreditation of existing skills more common than upskilling
Focus has to be relentless on quality and value-add to the employer and the apprentice

11. Apprenticeship Levy

12. Housing People The social housing training and development forum
Any Questions?
Christian Spence | Head of Research & Policy
Greater Manchester Chamber of Commerce