By Kieran Thompson 

Back in 2015’s Autumn Statement the then chancellor (and recently appointed Editor of the Evening Standard) George Osborne announced the government would increase apprenticeship provision in the UK to 3,000,000 by 2020, and would do so through the introduction of an ‘Apprenticeships Levy’. This levy was to apply to all employers with an annual wage-bill of more than £3m (the equivalent of a business employing 100 staff each earning £30,000 per year).

In simple terms, employers will pay a new tax to the government via PAYE. This can then be claimed back as ‘vouchers’ to pay for apprenticeship training delivered by recognised/approved training providers. For Cundall, this means a charge of more than £70,000 every year – all of which we can claim back as training fees for apprentices.

These fiscal changes were scheduled to coincide with a new range of apprenticeship ‘standards’ (aka ‘subjects’), the curriculum of which would be designed by employers themselves – ensuring the most up-to-date and industry-specific content. The government’s ambitious plan to have this range of new apprenticeship courses available in time for May 2017 failed in a spectacular fashion, however the annual levy charge has gone ahead regardless.

Thankfully, to mitigate the impact of having so few new accredited apprenticeship courses available for employers to choose from, the ‘old-style’ apprenticeship frameworks (the apprenticeship courses we know and love and have used in recent years) are being slowly phased-out, and will remain available to use while new employer-led ‘standards’ are published.

Since the introduction of these changes, the definition of an apprenticeship has changed. This is important as it is now clear what qualifies as an ‘apprenticeship’ and what can be funded by the tax.

Key points to remember about the changes:

  • Funding can only be claimed by employers against apprentices that are studying an accredited course, through an accredited provider
  • Apprenticeships are no longer just for new recruits. Existing staff can be trained through an apprenticeship programme (even if they already hold a degree level qualification)
  • Though the levy is paid by an employer based on their UK payroll, separate arrangements will be in place for Scotland, Wales and Northern Ireland (and Skills Development Scotland has stated that Scotland has no plans to adopt the digital system). Nice and straight-forward then!
  • Smaller companies (defined as those with an annual wage bill <£3m) can still take advantage of available government funding despite not needing to pay the levy charge
  • If we don’t use it, we lose it! Any unclaimed funds will cease to be available after 2 years
  • We can’t use the funding for CPD related training – strictly apprenticeships only

Despite some administrative issues relating to the launch of these changes, the levy charge does present us with an additional incentive to hire apprentices. Here are a few far more important reasons to do so:

  1. Invest in managers of the future: many apprentices go on to managerial roles within an organisation
  2. 72% of businesses employing apprentices report improved productivity (1)
  3. Boost the local economy: 81% of consumers prefer businesses that employ apprentices (1)
  4. We know it works! There are countless examples of fantastic apprentices around the business across almost all disciplines
  5. Apprentices stay with us longer: staff retention and engagement is higher with apprentices
  6. Low cost: When hiring at entry/junior level salaries are relatively low, and the cost of training (all the way to graduate level if needed) is funded through the levy

If anyone would like to know more about hiring apprentices, please contact a member of the Resourcing team.

 

(1) National Apprenticeship Service, https://www.gov.uk/education/apprenticeships-traineeships-and-internships

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Kieran Thompson, Recruitment, Uncategorized

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