Many businesses view investing training as something of a risky proposition. After all, there’s nothing concrete tying an employee to your company, which could mean that you’ve poured money down the proverbial sink if they decide to up sticks to pastures new.
However, the launch of the Apprenticeship Levy has taken choice out of the equation for many larger employers, who now face a ‘use it or lose it’ situation, whereby their contributions will be lost to the general Apprenticeship funding pot if they don’t opt to spend them on training.
In this guide, we’ll look at the best ways for financial directors (FDs) to ensure they’re getting the best return on investment for their Levy.
Paying the Levy
While the Apprenticeship Levy is undoubtedly on the radar of FDs, it’s probably worth covering the basics of the myriad Apprenticeship reforms coming in to force this April.
The first Levy payments are due in April and as of May, all Apprenticeship training will be carried out under the new system. Existing Apprenticeship programmes will be maintained under current funding arrangements for their duration.
Employers who meet the qualifying criteria of a payroll exceeding £3 million will be required to pay 0.5 per cent of their payroll into the Levy each month. The government will then add a 10 per cent top-up payment each month, which will be accessible via their online Apprenticeship Service Account (ASA).
Non-levy payers, or qualifying employers that have used up all the funds available in their ASA can utilise co-investment, whereby the government pays 90 per cent of training costs, in exchange for a 10 per cent contribution from employers.
Things get slightly more complex for those with workforces in devolved UK nations and for those whose payroll varies month-to-month, so be sure to check out our stand-alone guides for more information.
Alongside a new funding regime, the government is also aiming to make Apprenticeship-based training more responsive to the needs of employers.
To this end, existing frameworks are being phased out, with a new series of ‘Trailblazer’ standards that are being designed with direct input from employers in various sectors being gradually rolled out.
The reforms will also do away with eligibility criteria based around age or pre-existing qualifications, which will enable employers to utilise Apprenticeship-based training for their existing staff.
Maximising return on investment from the Apprenticeship Levy
The term ‘Apprenticeships’ may conjure up images of taking on young, entry-level staff, however, the reforms set out above mean that employers will be able to take advantage of Apprenticeship-based training for their existing employees in a wealth of areas.
From front-line specialists to business administration and support staff - new standards will enable organisations of all shapes and sizes to bolster their training and address emerging skills gaps in a variety of areas.
As part of the government’s plans to bring Apprenticeship-based qualifications up to parity with academic ones, three-year degree-level Apprenticeships are also being rolled out, which could offer an ideal avenue for offsetting current training spend.
From our interactions with employers, it’s clear that many are keen to use their Levy to upskill their existing employees and managers. However, it’s also an eminently viable path to take on new staff as apprentices and train them up into key roles - ensuring a robust talent pipeline for years to come.
The government is also offering incentives in this latter area, with a £1,000 support payment to both employers and training providers available when taking on 16-18 year olds, as well as uplift payments for apprentices from disadvantaged areas.
Whichever option (or mix of options) you choose, to ensure you’re getting value
for money, it’s vital to consider the Levy as part of a concerted workforce
Despite its imminent launch, the last-minute nature of many Levy-related announcements has left many organisations on the back foot. So if you’ve got any questions about the topics we’ve covered above, let us know via Twitter or LinkedIn.
And if you’re looking for bespoke advice on how to get best return on investment for your Levy, book a consultation with our team of experts today: