Apprenticeship Levy Are we ready?
There has been lots written in the press about the new apprenticeship levy, that is being introduced in April 2017. I believe it will change how we view and run apprenticeships beyond recognition. There will certainly be an increase of cash in the system. In the Horticultural Industry our new trailblazer standard has been approved and is now ready to be used as the framework for training operatives and supervisors. The whole principle of the trailblazers are to have good quality apprenticeship programmes that are employer led. If the reforms work as expected the whole process should be very straightforward from start to finish and this should have an impact on the skills gap.
The levy has been introduced as a way of funding the government’s ambition to support 3m high quality apprenticeships over the life of the current parliament. Businesses that qualify will need to start paying the levy from April 2017. It will affect all employers in the UK with a payroll greater than £3m.
How Much Will it Cost?
The levy will be charged at 0.5% of payroll but all employers will receive an allowance of £15,000 to off set against the payment, so in reality the cost of the levy will only be charged to employers with payroll greater than £3m, the government Stats suggest this will only affect 2% of employers.
|Example 1: Levy paying employer|
|Employer of 250 employees, each with a gross salary of £20,000 would pay:|
|Pay bill: 250 x £20,000 = £5,000,000|
|Levy sum: 0.5% x £5,000,000 = £25,000|
|Allowance: £25,000 – £15,000 = £10,000 annual levy payment|
|Example 2: Non-levy paying employer|
|Employer of 100 employees, each with a gross salary of £20,000 would pay:|
|Pay bill: 100 x £20,000 = £2,000,000|
|Levy sum: 0.5% x £2,000,000 = £10,000|
|Allowance: £10,000 – £15,000 = £0 annual levy payment|
To keep things simple it is envisaged that payments will be collected automatically through PAYE. Employers will also need to choose who delivers the apprenticeship training and assessments paid for through the new digital voucher scheme. Smaller employers who do not pay the levy will still be able to access funding through the digital voucher programme so the changes really do affect us all.
What we should be doing now?
1.Firstly all employers should calculate if they will be paying the levy and how much.
2. If like John O’Conner Grounds Maintenance, you are an employer that will be subject to the levy you should think about what you are going to do. i.e. start employing apprentices , develop an apprenticeship programme or increase the current number of apprentices.
3.Look for partners who can assist with your training and development programme.
As I previously mention, if you are not subject to the levy you can still access the funding – ‘Free Money’ So it really is the time to have a long think about all of this, consider starting an apprenticeship programme or look to increase the number of existing apprentices you have.