The Apprenticeship Levy

Training Levy

The Government’s Productivity Plan drew attention to the productivity gap that exists between the UK and many advanced economies. Central to tackling the productivity gap is improving the country’s

skills system.

In particular, the Productivity Plan drew attention to the importance of apprenticeships in delivering the skills the country requires if its productivity performance is to improve. It went on to comment that: “a step change in the scale of the apprenticeship programme also needs a step change in funding. Achieving this change will require a reversal in the trend of employer underinvestment in training, which has seen a rapid decline in the amount and quality of training undertaken by employees over the last 20  years. This decline is in part due to employer concerns that if they invest in training their employees, competing firms will free-ride on their investment.”

In order to address the problem of underinvestment, a levy on large employers will be introduced to fund apprenticeships.

The Budget Statement in July 2015  set out the Government’s rationale for the levy: “The most successful and productive economies in the world are committed to developing vocational skills. That is why the government has committed to significantly increase the quantity and quality of apprenticeships in England to 3  million starts this Parliament, putting control of funding in the hands of employers.

“This goal will require funding from employers. In recognition of this, the government will introduce a levy on large UK employers to fund the new apprenticeships. This approach will reverse the long-term trend of employer underinvestment in training, which has seen the number of employees who attend a training course away from the workplace fall from 141 ,000  in 1995  to 18 ,000  in 2014 .”

Levy fund

Employers with a wage bill over £3 m will be required to pay a levy of 0 .5 % of their payroll into a Digital Apprenticeship Service ((DAS) online account) via taxation. The government will top up this payment by 10 %. Employers will be given access to the

DAS to advertise apprenticeship vacancies, review payments, select training providers and End Point assessors. Payments will be made monthly. Each payment will be one twelfth of the total yearly amount required, and will show in the DAS from the following month.

Employers will have a 24  month period to use funds in their account or they will be lost to the Treasury.

Only apprenticeships which last 12 months will be allowed to be funded, old style apprenticeship frameworks will be removed as new Trailblazer apprenticeships are authorised.

The sector has three Trailblazer apprenticeships authorised for use:

●  Logistics and Supply Chain LGV Driver Level 2

●  Logistics and Supply Chain Operator L2

●  Logistics and Supply Chain Warehouse Operative L2
 

We expect older frameworks to be removed in the coming months. Higher level apprenticeships will be available through a partnership with the Chartered Management Institute. These will be available until the Trailblazer group write higher level trailblazers. 

 

Funding has been allocated as shown in the table below.

A successful RHA Levy Seminar took place at the XPO Learning centre on Tuesday 25  October 2016  and at the same time the Government released updated information on how the Levy will work and final funding results. For further information please contact c.snape@rha.uk.net

 

 

Funding Band Four

Logistics and supply chain operator and
warehouse operative

Funding Band Seven

Logistics and supply chain LGV driver

Maximum core Government funding

£2,700

£4,500

Employer co-investment for 19 years and above if full band is claimed – not applicable to levy payers

£300

£500

Co-investment for small employers with less than 50 employees employing a 16 to

18 year old

£0

£0

Additional incentive for 16 to 18 year old

£2000

(£1000 to employer and £1000 to training

provider in 2 instalments)

£2000

(£1000 to employer and £1000 to training

provider in 2 instalments)

Deprived area additions between £200 and

£600 dependant on area

   

Maximum total Government contribution

£3,000

£5,000

Total Available

Additional support for apprentices who require

English and Maths and with learning difficulties

£5,000

£7,000