Apprenticeship Levy Explained

As of May 2017, the apprenticeship levy became a “thing”. There has been lots of talk about the scheme but in reality the communication to the organisations it will affect has been inconsistent and there is still a lot of confusion flying about. There is a wealth of information out there in terms of the finer detail but we thought we’d try and explain what the Levy is about and how it might affect your organisation.

The Aim

The aim of the apprenticeship levy scheme is clear, the Government wants to increase the number of apprenticeship opportunities. Traditionally apprenticeships have been visualised as 16 year olds learning a trade. The new initiative widens the offering for apprenticeships. As well as pushing opportunities across a wealth of sectors, it will allow existing employees of an organisation to do an apprenticeship to upskill themselves.

So in summary, the aim is to increase the apprenticeship opportunity out there for UK people. Apprenticeships suddenly become a viable alternative to the University route for many industry sectors.

The Method

Clearly to encourage organisations to offer more apprenticeships, the Government needs to help those organisations fund them. With budgets being cut everywhere, there is no pot of money to draw on for this. That’s where we introduce the “Apprenticeship Levy”. Large employers should be providing apprenticeship opportunities as a way into roles within their organisations. The solution the Government has come up with is to impose a levy (aka tax) on large employers. So any organisation who has an annual wage bill of over £3 million will be subject to a charge of 0.5% of this wage bill. This is paid into an apprenticeship pot the Government holds. So the larger the wage bill, the more an organisation pays into the pot.

Just think of all those premier league clubs with the hefty wage bills… ouch!

So with a pot of money there, organisations are able to draw down funds against the running of apprenticeship programmes. So while organisations cannot get their money back, they can at least use a proportion of it against the training of apprentices. It is in the interest of these larger organisations to do this, otherwise it’s a tax they pay with no benefit. For smaller businesses (not paying the levy), it’s a chance to access funds to offer apprenticeships. Although the availability of funds for smaller businesses is not there yet, but it will follow.

The Delivery

With organisations accessing funds to deliver apprenticeships, the Government needs to ensure that this is done properly. Any agreed funds for apprenticeships are paid directly to the training providers delivering the apprenticeship training. Any organisation wishing to run an apprenticeship scheme needs to use a Government recognised (registered) training provider. To aid this, a series of trailblazer standards have been set out around a whole range of apprenticeship courses and sectors. Training providers need to deliver their content with these standards in mind. For an employer and apprentice, it means that the apprenticeships available are of a recognised and approved standard.

Finding the right training provider

There are over 1700 providers on the approved list, so finding the right one is not easy. To make things a little easier we’ve created a simple search tool to allow you to find providers by region and specialism.