The apprenticeship levy: what it means for non-levy payers
Lifetime Training’s Chief Operating Officer, Paul Hudson, discusses the effects of the levy on small and medium sized businesses.
From 1st May 2017, non-levied employers will be asked to make an initial contribution to the cost of an apprenticeship at 10% of the price negotiated with their training provider. The government will co-invest 90% of this negotiated price. Although this additional 10% payment may come as a bit of a blow to SME businesses looking to invest in their staff and new recruits the benefits of the new, reformed, apprenticeship standards on a business’s bottom line will far outweigh these minimal costs.
Employer designed new apprenticeship standards offer more role and sector relevant training. These new standards deliver greater flexibility than the previous framework structure. Standards will develop suitable skills, knowledge and behaviour to enable team members to perform their job roles to the highest possible standards. Whilst the expectation is that this is 20% of their working week, Lifetime will work with partners to ensure this is factored in to all apprenticeship delivery models.
Functional skills will be funded outside of the levy, and these exams must be successfully completed before a learner accesses EPA. The transition to End Point Assessment (EPA) introduces a critical requirement to track apprentice progress towards being end assessment ready. Ensuring your team has access to reporting technology will be paramount on monitoring the success of programmes and will support the funding process. Non-levied employers will be invoiced by their training provider via a mutually agreed timetable for the 10% contribution. This can be split over 12 months to spread the cost.
Businesses will no longer need to pay National Insurance contributions for apprentices under the age of 25 and a number of cash incentives have been put in place to support the wider adoption of apprenticeships:
- An annual £15,000 government allowance to offset the levy fee.
- When you employ an apprentice who is aged between 16 and 18, the government will contribute £1000 to employers to help meet the extra costs of employing them.
- When you employ an apprentice who is aged 19 to 24 years old who has been in the care of a local authority or has an Education, Health and Care Plan; the government will contribute £1000 to employers to help meet the extra costs of employing them.
- Employers of less than 50 people will not pay a contribution for apprentices aged 16-18 or those 19-24 who meet the special requirements. 100% of the cost will be supported by the government.
- If you employ an apprentice with additional learning needs, the government will continue to pay the training provider to cover extra costs.
More engaged, well-trained, on-message employees mean better productivity levels, increased customer satisfaction and above all a boost to your bottom line. Training costs aside, what’s not to like about that?
When it comes to choosing your training provider from the Register of Approved Training Providers remember that the most important element is ensuring your apprenticeships deliver what your business needs – a highly skilled, knowledgeable, proactive and loyal member of staff.
Lifetime is here to help employers navigate the complexities of the apprenticeship reforms. We aim to deliver a best-in-class apprenticeship programme that will deliver for business both now and in the years to come.
If you have a levy query, email our dedicated levy team on email@example.com.