Apprenticeship Levy Myths Debunked

The Apprenticeship Levy impacts every employer with an employee wage bill of more than ￡3million per annum. Introduced by the Government in 2017 to encourage employers to invest in training, there has, unfortunately, been very little accessible advice or guidance for employers and many see the levy as another ‘stealth tax’ which fails to bridge the skills-gap. 

With Department for Education figures showing that of the ￡2.7billion paid into the Apprenticeship Levy by UK employers only 14% of funds having been reinvested since its implementation, it’s clear that the take-up has not been as high as the Government would have hoped. 

With the skills shortage being cited as a barrier to past and future development within the engineering, technology and manufacturing sectors, particularly with the advent of technological advancements encapsulated within the Fourth Industrial Revolution, it is critical that industry is active in training and upskilling its workforce. May 2019 also sees employers beginning to lose any levy contributions that have not been utilised for training, which is non-refundable and ultimately lost to the Exchequer.

It is time to debunk some of the myths surrounding modern-day apprenticeships and embrace The Apprenticeship Levy as a key mechanism to address skill shortages.

1. THE APPRENTICESHIP LEVY GIVES EMPLOYERS LESS CONTROL  

FACT: The Apprenticeship Levy actually gives employers more control of the training that best suits their specific needs and moves away from the provider / college-led model, if utilised in the right way. Employers’ levy contributions are paid into a DAS account, which gives them more visibility of the apprenticeships available to them, and an easier way to manage and measure their investment.

2. APPRENTICESHIPS ARE JUST FOR YOUNG PEOPLE AGED BETWEEN 16-18 

FACT: Apprenticeships are available to people of all ages and can be tailored to suit the individual’s job role and responsibilities to further enhance their skill-set.

3. APPRENTICESHIPS ARE ONLY FOR ENTRY-LEVEL JOB VACANCIES - THEY ARE FOR LOW SKILLED PEOPLE

FACT: Apprenticeships are available from level 2 (GCSE level) to level 6 and 7, which are equivalent to a Bachelor’s or Master’s Degree.

4. 20% OF OFF-THE-JOB TRAINING IS INFLEXIBLE: ONE DAY A WEEK MUST BE SPENT IN COLLEGE 

FACT: Off-the-job training does not have to involve one day off a week spent in a classroom environment. It can be delivered at a time and location that suits the employer, provider and apprentice, allowing the learner to acquire the new knowledge, skills and behaviours required.

5. THE APPRENTICESHIP LEVY DOESN'T HAVE ANY BENEFITS 

FACT: By 2020, ￡2.5billion will be invested to increase the quality and the quantity of apprenticeships. The Government remains committed to achieving three million apprenticeship starts by 2020 in England and businesses will be able to tailor an apprenticeship to suit their own business objectives for growth, reducing recruitment costs, improving employee retention levels and benefiting from a stronger workforce.

6. APPRENTICESHIPS CANNOT BE USED FOR EXISTING STAFF

FACT: Apprenticeships CAN be used to upskill and / or retrain employees of any age, including older workers or existing staff, as long as the apprenticeship is giving them new skills that enable them to achieve competence in their chosen occupation. 

7. I WANT SOME OF MY UNSPENT LEVY FUNDS TO BE USED TO HELP OTHERS BY AGGREGATING SOME OF MY FUNDS WITH THEIRS, BUT I CAN'T DO THAT

FACT: You can transfer up to 25% of the funds in your Apprenticeship Levy account to other employers of your choice (your suppliers or partners), and you can work with others to agree how best to support your supply chains in this way.

8. ALL BUSINESSES MUST PAY THE APPRENTICESHIP LEVY

FACT: Only businesses that have an employee wage bill of ￡3million or more pay into the Apprenticeship Levy account, which is set at 0.5% of the total annual wage bill, including bonuses. Businesses that don’t currently meet the wage bill criteria can still gain access to Apprenticeship benefits under the co-investment model, which covers 90% of the total cost of apprenticeship training, increasing to 95% in May 2019.

SKILLS CONSULTANCY

Jonathan Lee Skills Consultancy makes it simple for clients to utilise Apprenticeship Levy funds to address skills gaps and improve employee retention, thus driving productivity and growth, all while putting money back on the bottom line. To find out more click here. 

GET IN TOUCH

If you would like to find out how to make your Apprenticeship Levy work for you, contact one of our team.