Apprenticeship levy: friend or foe?

This week hailed the start of our regional events programme for 2017. Our Membership and Services Officer, Esther, and I headed to Harrogate to meet with a mix of people responsible for, or at least influential within, learning and development for their organisations. And what a great meeting it was. There was a huge amount of passion in the room and a real sense of a will to work together. Positive and powerful stuff.

A few key hot topics up for discussion included workforce planning, staff engagement, ways of local collaborative working to meet needs and the apprenticeship levy, which comes in to force in April this year.

Now, this levy business, it’s a tricky business and you need to be aware of it. Yes, it only affects those organisations that have an annual staff wage bill of £3 million and over, however, there is plenty to bear in mind. Firstly, for those the levy does affect, it is yet another financial commitment to shoulder. Not that I’m suggesting we don’t want a trained workforce and a clear, visible pathway for potential staff to see – we do. We want people to choose social care as a career not just a ‘fill in’ job. But, for some of the larger organisations, the financial commitment for the levy runs in to hundreds of thousands of pounds, even with the £15k rebate that is available – and it’s compulsory. The money, collected in a similar way to PAYE, is put in an account to be spent on apprenticeship training – and the theory is if you don’t use it, you lose it. The government will absorb it, if the funds aren’t used within 24 months from the date of them being deposited.

The levy isn’t exclusive to Social Care employers of course; it is across all sectors and industries. For us though in short, it is money that providers with numerous staff must pay out. It is yet another burden on already over-stretched budgets in this frighteningly fragile sector. As well as the ‘hard cash’ requirement though, there is another requirement that employers need to adhere to – it seems each apprenticeship must spend 20% of their work time ‘off the job’ for 42 weeks of the year. So not only do employers need to stump up the levy, they also now have to arrange staff coverage for the proportion of time the apprentice cannot be at work (but still are being paid for). Now, that may work in bricklaying, hairdressing etc. where this ‘day release’ approach can be used to build practical skills for that ‘5th day’, in social care this doesn’t really work.  Therefore, it would make sense for employers to negotiate with the training provider they choose some beneficial activity to make use of this time.

Upon speaking to members, it is clear they are looking at ways to make all of this workable; in fact at the meeting we were all getting rather creative shall we say. The thinking of some is that the pool of money has to be to be paid, that is true, but you don’t necessarily need to utilise it. Sounds a bit strange but it may be cheaper to let the government absorb it rather than commit to employing a number of apprentices who can only physically work for 80% of their contracted time; and if there is a shortfall in the apprenticeship ‘pot’ the employer must pay the shortfall too as well as the levy. Instead, as an alternative, it may be better to still accredit staff with a diploma qualification, but let them physically work for 100% of the time and then look at other funding sources to contribute towards the cost of it.

Surely, not using the levy funds that employers have dutifully paid in flies in the face of what the overall intent of it is. But, by all means is an option to consider – I guess opinions will vary. The point is, employers need to carefully consider what the levy imposition means for them and identify the best way to make it work.

So what about those who have a staff bill less than £3 million each year? Well, there is no commitment to the levy payment, however, there will be a change in the way that apprenticeships are funded for all. This comes in to affect in May 2017. Eventually, all employers employing an apprentice will need to use the ‘apprenticeship service’.  Once again, I think it would be worth having a little look at what is going on sooner rather than later. See here for information.

Times are changing. For better or worse, you decide.

Lisa Lenton
ARC England Director