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Blog posted by: Andrew Gladstone-Heighton, Policy Leader, Tuesday 14 March 2017.

The introduction of the Apprenticeship Levy is now just one month away, and discussion about this measure is at an all-time high. We wanted to take this opportunity to remind you of all the key things you should know about the Levy.

The Apprenticeship Levy is of course part of the government’s plans to increase the number of businesses taking on apprenticeships, as it continues its drive to reach three million apprenticeship starts by 2020. From next month, all employers with an annual wage bill of over £3m will be required to pay a 0.5% tax, which they’ll be able to spend on training new apprentices or existing employees.

In terms of how it will all work – employers that pay the Levy will use an apprenticeship service account to manage their Levy allocation, which will include a 10% ‘top-up’ from the government. If they use all of their Levy allocation up, they’ll be expected to pay a 10% contribution towards the funding rate they’ve negotiated with a provider, with the government paying the remaining 90%.

Employers that don’t pay the Levy (those whose wage bill is below £3m) will not be using the apprenticeship service account immediately, and will rely on finding a provider with a funding allocation. The employer would then be required to pay a 10% contribution towards the funding rate they’ve negotiated with a provider (again, the government would pay the remaining 90%).  If the non-levied employer is taking on 16-18 year old apprentices in a business with fewer than 50 staff, this contribution would be waived.

The Levy is intended to encourage employers to invest in apprenticeships for their workforce – putting them under pressure to create the optimal apprenticeship scheme for their business. A lot of work has gone into ensuring that they are in the driving seat when negotiating prices and setting out their apprenticeship needs. According to the Department for Education, ‘the Levy will allow us to double investment in apprenticeships by 2020 from 2010 levels, to £2.5bn’. However, only time will tell whether this initiative leads to an increase in the number of apprenticeships and, most importantly, jobs.

For businesses around the UK, this has meant getting to grips with what the Levy means for them and how they can best navigate the opportunity and overcome the challenges it presents.

We’re here to support you both now and in the future with the new standards and end point assessment. We’re pleased to be one of the organisations approved by the Skills Funding Agency to deliver end point assessment, with a particular focus on the healthcare, customer service, and leadership and management sectors.

In this period of change, awarding organisations, providers and employers will all need to work together to navigate the landscape and deliver high quality apprenticeships that will provide learners with essential skills they need to succeed, and help employers to plug skills gaps in their businesses.

If you’d like to talk about how we can support you with making the most of the Levy, please get in touch with our Apprenticeship Consultants on 0191 240 8950, email levy@ncfe.org.uk or visit our dedicated website at www.levy.ncfe.org.uk.