The value of apprentices and the option of being able to take a vocational approach to further education is largely welcomed and has become a focus – with the government aiming to hit three million apprentices/hips by 2020. However, to fund this, an ‘Apprenticeship Levy’ is to be introduced from April 6, 2017.
The Apprenticeship Levy
So, what does this all mean? According to the DfE website, ‘the levy requires all employers operating in the UK, with a pay bill over £3m each year, to invest in apprenticeships’. This will include many schools and academies that will essentially be taxed at a rate of 0.5% of the organisation’s full pay bill, with a monthly levy allowance of £1,250 provided on a rollover – so unused allowances can be used in the following month.
According to the BBC, new research by City and Guilds shows that a third of employers are unaware that they will have to pay the new Apprenticeship Levy. The results of the survey – which polled 500 senior decision makers from a range of organisations about the impact changes to the apprenticeship system would have – showed that:
- Only 33% felt fully informed about the new rules
- A total of 28% were not sure whether it would affect their business
- Only 31% said they would hire more apprentices because of the levy
- 15% said they would have to cut other recruitment schemes to pay it
- 87% of employers said they struggle to fill vacancies, with 29% agreeing this was true of apprenticeship places.
- Overall, 47% felt the levy was a good way to get employers to pay for training
- 43% said it gave them more control and 34% believed it would improve quality.
What it means for schools
“As things stand, any multi academy trust or voluntary aided school with a payroll of over £3m per year will also be obliged to pay the levy,” the NAHT have said, offering schools a detailed brief to help navigate the Apprenticeship Levy. However, only schools and academies with a payroll bill in excess of the £3m will have to pay from the beginning.
The following is a breakdown of cost provided by the Department for Business, Innovation and Skills’ (BIS) in its consultation response, gave two examples of how the Levy would work in practice:
Employer of 250 employees, each with a gross salary of £20,000:
Pay bill: 250 x £20,000 = £5,000,000
Levy sum: 0.5% x £5,000,000 = £25,000
Allowance: £25,000 – £15,000 = £10,000 annual Levy payment
Employer of 100 employees, each with a gross salary of £20,000:
Pay bill: 100 x £20,000 = £2,000,000
Levy sum: 0.5% x £2,000,000 = £10,000
Allowance: £10,000 – £15,000 = £0 annual Levy payment
figures taken from National Schools Training
However, there is worry, as reported by the BBC in early January that small council schools may be ‘unfairly affected’, as they fall under the overall local authority wage bill.
As the April 6 date approaches, make sure that you are informed and aware of how both the funding and the Levy will impact your school.
Visit the DfE website for guidance and information on how the apprenticeship levy will work and how apprenticeship funding will operate from May 1, 2017.
Additional information on apprenticeships
Because the government will fund or co-fund Apprenticeships the cost to schools in minimal.
For apprentices aged 16 to 18-year-olds the government funds up to the cost of £15,000, and it offers co-funding for 19-year-olds and over.
With changes to NI, it is notable that employers don’t pay secondary class 1 NI contributions for apprentices.
The minimum salary for an apprentice is £6,435, and pay the standard £3.30 p/h minimum wage.
What’s expected of you as a school?
If your school is considering taking on apprentices, be aware that you will need to develop an Apprenticeship framework.
Employers are expected to provide apprentices with a basic 280 hours over a 12-month-period with employment for 30-hours p/w.
Level 2 training in maths and English should be provided for apprentices.
An apprenticeship agreement must be signed that details all the conditions of employment
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