Apprenticeship levy: are you informed?

14 February, 2017

New research by City & Guilds reveals there’s a lack of awareness among businesses just weeks before the introduction of the apprenticeship levy. In April 2017 the way the Government funds apprenticeships in England is going to change. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for the training of apprenticeship for all employers. A key objective of this is to encourage businesses to take on apprentices or otherwise, up skill their existing staff through an apprenticeship.

The CBI said the first two years of the apprenticeship levy should be treated as a "transition period" for businesses.

Kirstie Donnelly, managing director of City & Guilds, said: “The lack of awareness about the new apprenticeship system among our respondents is a cause for concern and shows that we still have a hill to climb in convincing people about the benefits apprentices can bring to business. However, those that do know about the levy are saying it is a great way for employers to pay for training, so there is clearly understanding and appreciation of apprenticeships out there. With just two months to go until the levy begins, it’s vital that everyone in the skills sector and government gets out there and communicates with these less enlightened businesses to help them see the huge potential benefits apprenticeships can bring."

The Government’s objective is that the new levy should help to improve the quantity and quality of apprenticeships and will come in to effect in April 2017. Key changes from the apprenticeship levy will include qualifications changing, all frameworks will be replaced by standards, these standards wont always include a qualification and the new standards will require an end point assessment. The funding is also changing, funding values will move to a model where providers and employers negotiate a rate for the training within one of 15 pre-determined upper limits. Levy payments are being introduced; employers will pay 0.5% of their payroll into scheme pot if their payroll exceeds £3m per year. SFA will pay 90% of the negotiated funding rate for non-levy paying employers, or those who have exceeded their levy scheme pot, with the employer making up the other 10%. In some cases the contribution will be 100% and additional payments in dome instances may be applicable.

A survey was completed by 500 senior decision-makers responsible for management of apprenticeship budgets in their organisations. It showed that only 33% of respondents felt fully informed about the changes that would be caused by the apprenticeship levy. 23% were not aware of the new apprenticeships system, while 28% of those surveyed were not sure if they would be affected by the levy scheme. Meanwhile, only 31% of respondents said they would consider increasing their number of apprentices because of the levy. 15% of respondents said that they would be cutting other recruitment schemes to pay for the levy, such as traineeships and internships. However, the survey also revealed that of 59 % intended to recruit apprentices in the coming year – 15 percentage points more than the 44 per cent who intended to recruit graduates.

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