Blog post

What you still need to know about the Apprenticeship Levy

In April 2017, the Government launched the Apprenticeship Levy which requires employers with a pay bill over £3 million each year to pay a levy charged at a rate of 0.5%, to fund new apprenticeships.

By Jane Lowe - 17 January 2018

Here Jane Lowe, Head of Apprenticeships at the University of Derby, discusses what businesses still need to know about the levy almost a year on.

On the face of it, the levy sounds like a perfect opportunity to urge larger businesses, who didn’t always invest in apprenticeships in any real numbers, to put aside money to pay for apprenticeships and help address some of the governments targets of poor productivity and social mobility.

However, instead of taking the sting out of taxing these employers to the tune of millions, in some cases, the levy has led to some confusion. Some employers have been left in the dark not knowing how they can access their levy pot.

The British Chamber of Commerce and Middlesex University surveyed more than 1,600 UK businesses in 2016, and at that time, 39% of firms still had no understanding, or hadn’t even heard of the levy, and 51% of firms didn’t understand how the levy worked.

Even now, we are finding that some of the employers we work with are surprised when they are advised that they can use the co-funded allocation if they spend all of their levy, and in 2018 donate 10% to their supply chain. This is concerning given that the government have classed the new reforms as “employer led” (Richard Review of Apprenticeships 2012).

The non-levy debacle

We then look to the 98% of employers who are not levy payers. They are the ones who need to turn to the support of registered providers who, in October, submitted a tender for a proportion of funding to support the 90% co funding to match the 10% paid by the employers for each apprenticeship.

The Education and Skills Funding Agency postponed the releasing of the tender outcomes twice stating a ‘high volume’ of applications that vastly exceeded the £650 million allocation. The postponement of this funding for us and others was very frustrating and has impacted on the plans that our employers have for taking on apprentices, especially in certain sectors such as health. We now have our allocation, which was not quite what we requested, but we are determined to be successful in the face of adversity, and are working quickly with our employers to ensure that we deliver the training.

Supporting the quality of the brand

In September 2015, a government response to the consultation on protecting the term ‘apprenticeship’ from misuse stated; “As the apprenticeship brand grows, we are concerned that there is greater risk that the term apprenticeship could be misused….this could damage the Governments apprenticeship brand and have a negative impact on growth.”

The University of Derby has delivered apprenticeships for over three years now, and we feel very passionate that the government need to work directly with institutions and employers, and communicate their plans for the reforms more coherently. And above all else, listen to the apprentices’ and employer voice.

The quality of this brand name, ‘apprenticeship’, can be protected as long as the experience of an apprenticeship journey is of high quality for both the apprentice and the employer, and it must deliver fully on the expectations of outcomes in both the training and the qualification, and for the apprentice – ultimately result in a job.

The University of Derby promotes all the invaluable opportunities that apprenticeships at all levels can bring, and we believe that we will contribute to the three million starts that the Government has set as a target, but the target has to be approached in the right way. Degree apprenticeships are being developed with an average programme length of four years, that’s a long time to commit to one apprentice, and a long time for an apprentice to devote their time to a company. Therefore it is important in developing apprenticeships that they are innovative, flexible and deliver the perfect solution in order to improve and increase retention.

So what are employers telling us they want?

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About the author

Jane Lowe
Head of Apprenticeships

I am responsible for the strategic development and implementation of Higher and Degree Apprenticeships, working closely with university colleagues, government agencies, local partnerships, employers sector skills councils, and other industry groups.