Companies need to plan for apprenticeship shake-up in 2017

Written by: Chris James | Published:

There is a big shake-up in how apprenticeships will be funded in England from April 2017. With under a year to go before the introduction of the Apprenticeship Levy, companies need to be making plans, says Chris James, CEO, WAMITAB

All UK companies (private and public sector) with an annual payroll of £3m will be required to pay the apprenticeship levy, equal to 0.5% of their yearly pay bill, which will be collected monthly via PAYE.

Each company will receive a levy allowance of £15,000/year to offset against the amount due, with payments allowable for corporation tax and a further automatic 10% government top up. Money will be channelled through the digital apprenticeship service due to go live in January 2017.

The government’s goal is that the levy will help to resolve skills shortages through the creation of three million new apprenticeships by 2020.

Are apprenticeships what employers want? Are apprenticeships the only solution for all skills shortages?

As to be expected with such a major change, there has been some backlash, with the British Chambers of Commerce (BCC) warning that the current design of the scheme "could lead businesses to shoehorn other forms of training into apprenticeships in order to recover their costs".

The Confederation of British Industry (CBI) also voiced concerns that with such an imminent deadline and so much still to be worked out, business leaders were understandably uneasy as it felt “top-down” rather than business-led.

What has been clearly stipulated is that funds may only be spent on apprenticeship training that is delivered through approved training providers using either the Trailblazer standards or the old apprenticeship frameworks.

Employers required to pay the levy, but who do not currently take on apprentices should be considering how they can best benefit from the scheme.

For smaller employers who do not need to pay the levy, apprenticeships will be funded on a co-investment basis, with the employer and the government each paying. This will apply to all new apprenticeships from April 2017 but the actual amounts involved are still to be communicated, which creates uncertainty.

Worth noting too is that education is a devolved area of government so the administration of apprenticeships is different in Northern Ireland, Scotland and Wales, but how the levy funds will be shared across borders is yet to be finalised.

How will it impact on the waste and recycling sector?

Obviously, some of the big players will be required to pay the levy as will some local authorities and the NHS. Does this mean that there will be an increase in apprenticeships for waste operatives? Or will other functional areas like finance, marketing, administration and procurement benefit more?

Currently there are no Trailblazer standards for the waste and recycling industry, which could possibly indicate that this is not a priority for sector employers.

However, existing frameworks are still valid until 2020 and take up for the Sustainable Resource Management Apprenticeship has remained steady at around 900-1100 per year since 2011/12.

If you are thinking about apprenticeships then you should review what is available and decide what makes good business sense. Any apprentices taken on before April 2017 will be under the current funding mechanism, thereafter the new system will apply.

Further announcements are due in June, October and December (see Policy in instalments!

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