Apprenticeship reform explained
The Government has set a target that by 2020, 3 million people will have completed an apprenticeship. This demands a significant increase from the number of apprenticeships delivered in the last parliament.
To encourage larger businesses to engage with apprenticeships, the Government will introduce a levy in April 2017:
- Any business with a payroll over £3 million will pay it.
- It will equate to 0.5% of total payroll costs.
- The levy will can only be used for apprenticeship training.
- Public sector employers will be expected to employ 2.3% of their workforce through an apprenticeship.
- Organisations can voluntarily sign up for the 5% club and commit to 5% of their workforce being an apprentice.
- The levy may be able to be used for a company’s supply chain, but this is yet to be approved.
- Business will access apprenticeships and providers through a digital voucher system whether they pay the levy or not.
- Registered providers will be listed on the system and employers will be able to choose which provider they work with.
- Being a registered provider is no guarantee of quality or performance.
If you are a small employer who does not pay the levy you will continue to access apprenticeships in the usual way.
There are other incentives linked to an apprenticeship for all employers, for example employers working with apprentices between the ages of 16-24 will not pay the employers’ national insurance contribution on their wages. Small employers working with apprentices aged 16-18 can claim an AGE grant of £1,500 per apprentice.
Whilst much of the focus has been around the introduction of the Levy, small businesses who do not need to pay the Levy will still be able to access new apprenticeship standards. This are new occupational competency standards which has been developed by employers. They are intended to be much more flexible, giving the employer far more control over what is delivered with the potential that apprenticeships in the future can be bespoke to an individual employer’s needs.
There is a common mis-conception that apprentices are new recruits, young and in entry positions. However, apprentices can be any age, can be existing employees and can be undertaking high level roles in the organisation.
As such, business can look to their own employee training needs with a view to perhaps delivering some of this need through apprenticeships.