The Role of the Levy for Your Business

The Apprenticeship Levy will be good for your business. Sussex Business Times asks Marie Harris to explain why and how

As we all know, the greatest asset any business, irrespective of size, can have is their staff. It is therefore crucial for sustainability to ensure that staff are given the opportunity to reinvent themselves and hone existing skills or develop new ones so that they can evolve with the business, stay motivated and remain productive. From April 2017 the introduction of The Apprenticeship Levy and the new Apprenticeship Standards gives employers the opportunity to develop career pathways for everyone in their business from recruitment to retirement. The question is ‘are you ready to take advantage of the opportunities these changes present?

Benefits

The majority of us know that recruiting young people into businesses as apprentices can pay dividends. With the right candidate, an apprenticeship framework that enables the candidate to develop the skills that the business needs and the right provider, you have a recipe for success. The ‘grow your own’ principle has been used over the years by apprenticeship providers as the hook to engage employers and has proved, in the main, to be successful. Young people can and do bring with them fresh ideas, enthusiasm and energy. They can be your best ambassadors and will always remember that you were the one who gave them a start in their working life. They are more likely to become loyal, long serving employees.

Apprenticeship Frameworks being replaced by Apprenticeship Standards puts employers firmly in the driving seat in terms of what training their new recruit will undertake. Long gone are the days when apprenticeships were only for Engineers, Mechanics, Hairdressers and Construction Workers.

All businesses have their core skill needs but the broader business needs, Finance, Marketing, HR, Sales, Management, Customer Service etc., can also be filled successfully by apprentices.

The change from Apprenticeship Frameworks to Apprenticeship Standards means that not only can you create and offer opportunity to young people and ‘grow your own’, you can also ensure that existing employees have a clear pathway to progression within your organisation. The primary reason for this being the restriction on age limits (for funding purposes) and prior qualifications have been lifted.

Apprenticeship Standards (Frameworks) will be available from entry level through to Degree level.

The Role of the Levy
The government continues to hold Apprenticeships as its flagship programme and has set a target of three million new apprentices by 2020. In the 2015 Summer Budget the government announced plans to introduce a tax on big businesses in the form of an Apprenticeship Levy. This means that from April 2017, all UK employers with annual salary bills of more than £3 million will pay this Levy. Employers with a salary bill of less than £3m will not have to pay the Levy, although they will have to make a financial contribution equivalent to 10% of the apprenticeship cost – still great value nevertheless! The purpose of the Levy is quite clear; it is to fund a greater number of apprenticeships across the UK and to provide a degree of sustainability and simplicity in the funding system. This is good news for UK business and even better news for aspiring apprentices.

The rate will be charged at 0.5% of the employer’s pay bill but only if the salary bill is in excess of £3 million. The government estimates that only 2% of employers will be eligible to pay the Levy and this could raise up to £3 billion a year by 2019-20. The funds collected will be accessible to employers who want to purchase apprenticeship training regardless of whether they have paid the Levy or not.

What to Look Out For

Funding will no longer be dependent on age and there will be one price, which will be capped, per funding band. The band that the training your organisation needs will be determined by government and based on the cost of delivery. It is anticipated that there will be 15 bands representing sectors and levels. For example; entry level customer service (L2) may be banded at, say £4,000, whereas a level 3 Welding band would have a value of say, £12,000. All standards are assigned to one funding band. Any costs above the cap must be paid for by the employer.

The employer and training provider agree on a price for an apprentice’s training and assessment within the standards funding band. If you are a non-Levy paying employer the government will pay 90% of the total agreed price up to the set maximum for that funding band and the employer pays the remaining 10%. Levy paying employers have all of the costs paid from their Digital Apprenticeship Service (DAS) account. Employers in scope for the Levy will be required to set up a DAS account from January 2017 and payment into their digital account will come directly through HMRC and PAYE schemes.

How Beta Futures Can Help

As with any government scheme there is a lot to take in and administer. We know from the work that we have done that there will be plenty of businesses who won’t know where to begin. Beta Futures is here to help!

We are already working with employers to create new, exciting apprenticeship programmes. We tailor our services to exactly what employers want! First, we will ensure your business is taking the correct steps to be eligible for government funding. For employers in scope for payment of the Levy we can help maximise your return on the investment. For smaller organisations we will consult with you on developing the skills your organisation needs and help you find the right apprentices and training providers.

So to take advantage of the opportunity these changes present please contact us and we will start looking at ways to help you develop your workforce with maximum government support!. Our motto is ‘Recruit, Retrain Retain’.

Written by Marie Harris, MD Beta Futures Ltd.

www.betafutures.com