Apprenticeships in England are changing. As a result of government reforms, a new style of apprenticeships has been designed.
Why are they changing?
In 2012, a review of apprenticeships was carried out to identify whether apprenticeships delivered the training, qualifications and skills that employers and learners needed.
The report highlighted that a significant number of employers felt the current Specification of Apprenticeship Standards for England (SASE) frameworks were not fit for industry needs. As a result, the government formed a strategy to redefine apprenticeships to meet these changing needs.
Introduction of new apprenticeship standards
New apprenticeship standards will replace the current SASE frameworks. The standards will:
- Define an apprenticeship that lasts a minimum of 12 months
- Be linked to a specific occupational level
- Respond to employers' needs, ensuring that apprenticeships are high quality and rigorous and develop the knowledge, skills and behaviour required for a specific job role
- Be designed to prepare the apprentice for the (newly introduced) end-point assessment.
Standards are created by groups of employers - known as trailblazers (see below).
The ‘trailblazer’ aims to meet the changing needs of employers, learners and providers by:
• Giving employers control in designing apprenticeships
• Increasing the flexibility of delivery
• Simplifying the funding system
• Increasing the effectiveness of training.
When do the trailblazer apprenticeships begin?
They have already started in some occupations. The government had anticipated that all new apprenticeships starting from 2017 must meet the new trailblazer standards. However, the development of these new apprenticeship standards is taking much longer that they'd anticipated.
If you're an employer with a pay bill over £3 million each year, you must pay the Apprenticeship Levy from 6 April 2017.
The levy will not affect the way you fund training for apprentices who started an apprenticeship programme before 1 May 2017. You'll need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship started.
Why is the levy being introduced?
The levy is being introduced to find a step change in apprenticeship numbers and quality - delivering on the commitment that there will be 3 million additional apprenticeship starts by 2020. The levy will put apprenticeship funding on a sustainable footing and improve the technical and professional skills of the workforce.
Do I need to pay?
You will need to pay the levy if you are an employer, in any sector, with a pay bill of more than £3 million each year. The levy will be charged at a rate of 0.5% of your annual pay bill. You will have a levy allowance of £15,000 per year to offset against the levy you must pay. This means you will only pay the levy if your pay bill exceeds £3 million in a given year. You will pay the levy to HM Revenue and Customs (HMRC) through the Pay as You Earn (PAYE) process.
What happens to firms who do not need to pay?
The government will continue to provide funding for apprenticeship training.
How much funding will apprenticeships receive?
All approved apprenticeship standards will be allocated a funding cap which will indicate how much levy funding can be used for each apprenticeship.
How can you spend it?
Levy funds will be held in 'digital' accounts. They cannot be used on other associated costs such as apprentice wages, travel and subsidiary costs or the costs of setting up an apprenticeship programme. However, a range of apprenticeship training standards can be funded at all levels right up to a degree.
Can I use the levy to fund existing employees?
You can spend your levy funds on apprentice training for either existing staff or new recruits - as long as the training meets an approved standard or framework and the individual meets the apprentice eligibility criteria.
What happens if you don't spend the levy funds?
The funds will stay in your account for 24 months; if you do not use them they will be lost and redistributed to other employers.
How will this affect trailblazers?
This will not affect trailblazer apprenticeship standards. The work on these standards will continue and as new standards are ready for delivery they will be eligible for funding through the levy.
How do I use funds from my digital account to buy training?
When an apprenticeship has started, monthly payments will be automatically taken from your digital account and sent to the training provider. This spreads the cost over the lifetime of the apprenticeship. You will see funds entering your digital account each month as you pay the levy, and funds leaving the account regularly each month as you pay for training.
What should you do now?
Think of the levy as an investment - not a tax. By implementing a successful apprenticeship programme, you will be able to develop the skills of your workforce and drive business improvement.
We're already helping employers like you understand their levy payments and maximize their return on investment. Get in touch with us to receive impartial help and support to help you start your apprenticeship journey, and find out how we can help your business get the benefits from this investment in skills development into your company.