COMPLIANCE
T he apprenticeship levy was introduced in April 2017 and was seen by some organisations as yet another cost burden of employing people. However, to others, it was a golden opportunity to increase the number of apprentices and to have a pot of money available to fund their training. Even more exciting was the fact it wasn’t restricted to those aged under 25. It gave employers the opportunity to put employees through training to achieve skills and qualifications that, in the past, they would have had to fight for the budget to provide. It gave employers the opportunity to put employees through training to achieve skills and qualifications that, in the past, they would have had to fight for the budget to provide There are numerous examples of how the apprenticeship levy has been used to develop apprenticeships in the public sector. One of the apprenticeship training courses available is the Level 6 Social Worker Degree, which is equivalent to a degree in social care. This gives local authorities the opportunity to provide a career path to those wanting to be a social worker, with the benefit of combining degree level study with working and gaining practical experience in social care. How the apprenticeship levy currently works First, the apprenticeship levy needs to be paid into an apprenticeship service account. As you’ll all know, employers with an annual pay bill of more than £3 million must pay a 0.5% levy on their annual pay bill, with the government offsetting the payment with a yearly £15,000 allowance. The scheme was introduced to fund apprenticeships and to help smaller businesses that might not be able to afford the training costs. The government provides a 10% top up to the digital accounts of all levy-paying employers. The levy funds need to be carefully
managed as there’s a rolling 24-month period in which to spend funds added to the account, including the top up, before they expire. Levy-paying companies can transfer some of their levy funds to other non- levy paying organisations, with the aim of supporting smaller businesses’ training needs. It can be extremely helpful for a large organisation to support the smaller organisations within its supply chain, ensuring that the skills needed to support delivery are there. However, there are downsides to the apprenticeship levy and how organisations can access and use the apprenticeship funds they’ve accumulated. Once the apprenticeship levy has been paid into the training account, it can only be used for approved apprenticeship training courses and assessments from approved training providers. The funds cannot be used for: l wages Some say the system isn’t very flexible and can restrict the types of industry which can benefit from the levy. The retail industry is one such example. Marks and Spencer has recently asked the government to make two changes as they comment that the current rules are too restrictive. The organisation is asking for a move to a ‘general training levy’. It would like to use the funds to raise awareness of the opportunities available within the retail sector by having ‘taster sessions’ with potential employees. This would help to build more resilient and enticing skills development programmes. Allowing the levy to fund additional hours while apprentices were in training would also help. The organisation is asking for a move to a ‘general training levy’ l statutory licences to practise l travel and subsidiary costs l work placement programmes l setting up an apprenticeship programme. Room for improvement?
more adequate to specific skills deficits across the UK. The current levy requires 20% of an apprentice’s time to be spent in classroom training, which isn’t practical in retail and some other industries. The current levy requires 20% of an apprentice’s time to be spent in classroom training, which isn’t practical in retail and some other industries The Confederation of Business Industry (CBI) is also calling for greater flexibility in the apprenticeship levy and has used the retail and wholesale sector as an example of where this could benefit employees and prompt growth. It’s said that one in five UK jobs is supported by the sector, so it’s a major contributor to employment in the UK. A potential review of the apprenticeship levy was mentioned in the spring budget of 2022 by Rishi Sunak but later, the Treasury clarified there would be no formal review of the apprenticeship system but that all taxes were under constant review. Although there could be greater flexibility in how the levy can be spent, there are areas where it’s being used successfully. As well as degree level apprenticeships for social workers, there are now Police Constable Degree Apprenticeships, and the National Health Service is using its levy payments to recruit and train new nurses and healthcare professionals. There’s an argument to say that degree level apprenticeships funded by the apprenticeship levy while in work are an excellent alternative to a university degree and the associated debt created by student loans. This, combined with the fact there’s no age limit for apprenticeships, gives employers and employees alike a chance to improve skills needed to bridge the skills gap, across all levels. It’s fair to say that while some employers and industry sectors want changes to the apprenticeship levy, others have most definitely fallen in love with it. n
Marks and Spencer also said the government should allow retailers to design courses and apprenticeships which are
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| Professional in Payroll, Pensions and Reward |
Issue 87 | February 2023
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