In the last few years, the UK government has been keen to ensure that British businesses are more empowered to realise the considerable benefits that apprenticeships can offer in terms of workforce planning and providing access to skills.
With key skills gaps and shortages having hampered growth for many organisations over the last few years, a growing awareness is emerging that this problem cannot be solved without greater investment in skills and knowledge acquisition programmes. However, many companies lack the funds and resources to take any action on this front.
The Apprenticeship Levy scheme is set to provide a solution to this by introducing a new tax that will raise money for companies to spend on apprenticeship training. The wide-ranging programme is set to have a considerable impact on the business community - meaning it is essential that employers make themselves aware of its ins and outs as soon as possible.
Introduced in April 2017, the Apprenticeship Levy requires all companies that pay more than £3 million in wages to contribute 0.5 per cent of their overall salary bill into an independent fund. It applies to all organisations operating in the UK, including private, public and voluntary sector bodies.
A £15,000 allowance has been agreed to offset the cost, with the government adding an extra ten per cent in England to the overall funding pot, which businesses can access to support their apprenticeship training initiatives.
The aim of the new levy will be to hand the control of apprenticeship funding to employers, empowering them to get what they need from the training market.
Access to levy funds will be offered through an online apprenticeship service that allows companies to receive vouchers to spend on training with an approved provider. In doing so, the government is hopeful that businesses will be able to help it make good on its commitment of three million new apprenticeship starts by 2020.
Once collected, the cash will appear on the online system the following month, where employers can access the resources via their apprenticeship service account. They will then have 24 months in which to spend it, allowing them to finance apprenticeship training, identify a training provider, choose an apprenticeship training course or find a candidate. This time limit works on a "use it or lose it" basis, although from April 2018 it will be possible to transfer up to ten per cent of digital vouchers for a year to another employer that uses the apprenticeship service.
The money can be used to cover the costs of an apprentice's training, assessment and certification. This may pertain to either existing staff or new recruits, provided that the training meets an approved standard or framework, and the individual conforms to apprentice eligibility criteria.
Employers will also be able to pay for qualifications using these funds, as long as they are included within approved apprenticeship standards and frameworks, although qualifications are not mandatory.
It is worth noting that levy funds cannot be used to cover costs associated with taking on an apprentice, including overheads, supervision costs and wages. However, it will be possible to receive support for apprenticeships at the same level or lesser than an individual's current highest existing qualification; as long as it can be proven that they will acquire substantively new skills through the apprenticeship.
Although the basic tenets of the levy are straightforward enough, the scheme encompasses a number of variables to ensure it meets the divergent needs of businesses of various sizes.
Support will be available for apprenticeships that cover a range of levels, from semi-skilled operators (level 2) through to postgraduate engineers (level 7), while a total of 15 funding bands are available, up to a maximum value of £27,000. In each case, employers will pay month-to-month for the training, with 20 per cent of the total cost held back and taken from the service account at the end of the apprenticeship.
Additional support is also available in certain circumstances. For example, the government will fund 100 per cent of apprenticeship training costs for employers with fewer than 50 employees, if the apprentice is aged from 19 to 24 years old and was formerly in care, or has a local authority education, health and care plan.
Incentive payments of £1,000 are offered to any businesses that provide apprenticeships to young people in this demographic, or to those aged between 16 and 18.
By offering these perks to those who provide training to young people from poorer backgrounds, the government is hoping to ensure the benefits of the Apprenticeship Levy can be felt by workers and businesses alike.