The Apprenticeship Levy: What it means for your business

By Hannah Thompson

- Last updated on GMT

The Apprenticeship Levy: What it means for your business

Related tags: Apprenticeship, Vocational education

The new Apprenticeship Levy is set to roll out next month, and the changes will affect everyone. Here’s how to avoid missing out

Need to know

  • From May 2017, 100% funded apprenticeships will overall cease to exist
  • All employers will be required to make a 10% cash contribution towards the cost of any apprenticeship programmes
  • However, only around 2% of UK businesses will be large enough to contribute directly to the Levy

Jill Whittaker, managing director at hospitality skills and apprenticeship provider HIT Training, explains what this could mean for your business…

How will the Apprenticeship Levy change things for employers?

Only businesses with an annual pay bill over £3m will be required to contribute to the Apprenticeship Levy, meaning an estimated 98% of UK businesses will not. However, the majority of 100% funded apprenticeships are about to disappear. All businesses will be affected by a change to the funding they can access.

What main advantage will the Levy bring?

Ultimately, it will benefit all hospitality businesses, and will bring in an extra £1bn a year to pay for apprenticeships in England. 

What will change from 1 May?

Employers will be required to make a financial cash contribution of 10% towards the cost of any apprenticeship programmes their employees undertake. If you are a company with an annual pay bill under £3m, planning to enrol staff in training this year, it makes sense to sign them up now and take advantage of the 100% funding before it disappears.

Will all types of businesses and apprenticeships be hit the same?

No. Businesses with fewer than 50 employees will still have access to 100% funding by the Government after 1 May for an apprentice who is aged 16-18, is a care leaver, or is aged 19-24 and has an Education Health and Care plan.

So how can SMEs ensure that they take full advantage of the current funding available?

At the moment, SMEs are able to access ‘contribution free’ apprenticeship frameworks. This means that if apprentices are enrolled before the end of April, there is no cash contribution to make for the duration of their programme – they are just asked to provide access to facilities and materials to support their apprentices.

What would be your biggest tip for SMEs when it comes to apprentices and apprenticeships?

Apprenticeships are an opportunity to nurture home-grown talent and develop the leaders of the future. Formalising staff development will help you to keep skills current and to plug any potential gaps that may open up across your business. You just need to make sure you keep the emphasis on high quality and training suitable for the needs of your business.

How can businesses make sure they get it right?

Fundamental to this is finding the right training partner to suit your business. Look at a training provider’s completion rates for the sector and what they specialise in, and choose one that can offer good-quality training across all your sites. Information on this is available via the registered training providers website from the Government, here​.  Also be aware that all training providers with government contracts are subject to regular Ofsted inspections. It’s imperative to make sure your training provider is financially secure, and because of this all training providers go through an accreditation process to join the approved register, which includes a financial check.

What’s the biggest misconception about apprentices and apprenticeships?

The term ‘apprentice’ has historically been associated with a young school leaver or a trade specific skills worker, but this has all changed. The new apprenticeship scheme has a much broader context and provides the opportunity to develop people at all levels.

Why would a business hire an apprentice?

The benefits! It can have a positive impact on the whole team, improve employee retention, and lead to a more motivated, satisfied and productive team. It also helps long-term recruitment: according to the CIPD, 71% of apprentices stay with the same employer once their apprenticeship has finished, while the Skills Funding Agency says that 90% of apprentices stay in employment overall.

Related topics: Business & Legislation

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