Policy News Journal - 2016-17

The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal

 Give employers extra flexibility and the extra time they need to plan for the reforms by extending the expiry date of levy contributions to 24 months (from the 18 months originally proposed)  Introduce a system for employers to transfer funds from 2018, working with a new employer steering group to design this system so that it meets their needs  Help training providers adapt to the new, simpler funding model, by increasing their funding by an extra 20% where they train 16 to 18 year olds on frameworks. This will come from government and not from employers' digital accounts. This transitional payment aims to ensure stability as the market adjusts to reforms  Retain a simplified version of the current system of support for those from disadvantaged areas for one year whilst a fuller review is conducted into the best way to support individuals from all backgrounds into apprenticeships

Employers paying the levy will be able to choose a provider from the new Register of Apprenticeship Training Providers. All providers on the register will have to pass quality and financial tests.

Providers who want to deliver less than £100k of apprenticeship training per year as a subcontractor can choose to apply for the register but it will not be compulsory.

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The apprenticeship levy – how will employers respond? 4 November 2016

Research has been conducted into how employers are likely to react to the introduction of the apprenticeship levy.

The research provides a summary of the possible effects of the apprenticeship levy on:

 apprenticeship take-up;  existing employer-provided training schemes; and  the range of occupations that could be trained using an apprenticeship.

From April 2017, large employers in the UK will be required to pay an apprenticeship levy based on their total pay bill. This study, undertaken by the Institute for Employment Research and IFF Research, was commissioned by the Department for Business, Innovation and Skills (though the policy responsibility for FE and apprenticeships has now shifted to the Department for Education) in order to better understand, in advance of the implementation of the levy, employers’ likely behaviours in response to this mandatory contribution towards apprenticeship training. At the time of the study’s fieldwork being carried out, employers were only beginning to come to terms with the idea of an apprenticeship levy and its implications for their business. Though most employers could roughly estimate the size of their levy liability they were unsure of how much apprenticeship funding this could fund in practice - some indicated that until they had more information on expected levels of employer contribution to the costs of apprenticeships there was little point in trying to work out their planned response to the introduction of the levy in 2017. For those who had a longer history of engaging with apprenticeships and knowledge of the costs of this form of training, this was somewhat clearer. Employers were however clear to note that the levy payment would be entered as a cost in their internal management accounts and as such it would need to be accounted for in some way. Though concrete plans for the use of their levy funds were not in place for the majority of employers involved in this study, many were in the process of preparing outline plans for consideration by management. The initial reactions of employers to the apprenticeship levy can be summarised as follows:  Business as usual – a view more typical of businesses already involved in the delivery of relatively high cost apprenticeship (e.g. engineering and construction) where the decision to train apprentices was largely driven by the employer’s demand for skills in the workplace that could really only be met through apprenticeship. An indicative estimate suggests that a substantial share of employers fell into this group;

 Using the levy as a catalyst to increase the provision of apprenticeship training in the business – a response provided by employers that had hitherto been engaged in providing relatively low cost apprenticeships (e.g. in business services) but where similar alternatives to this form of training were


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