How the apprenticeship
levy will work
Julian Gravatt, Assistant Chief Executive
17 May 2016
3 million apprenticeships + the levy
“We have already delivered 2.2 million new apprenticeships over
the last five years. Over the next five years we will deliver three
million more and ensure they deliver the skills employers need”
Conservative manifesto, 2015
“While many firms do a brilliant job training their workforces; there
are too many large companies who leave the training to others
and take a free ride on the system. So we are going to take a
radical, and frankly long overdue approach. We are going to
introduce an apprenticeship levy on all large firms. Firms that offer
apprenticeships can get more back than they put in”
Summer budget speech, 2015
3 million apprenticeships + the levy
“Apprenticeship spending will double over the decade”
2015 spending review
3500
3000
2500
2000
Levy
1500
Spending
16-18
1000
19+
500
0
… via a new hypothecated tax
Apprenticeships for large employers (c25,000)
Large employer
Apprentice
Registered
Training
Organisation
Levy (0.5% of payroll)
Employer
directs
recipient
and price
Payment on
confirmation of training
(ILR) and employer
authorisation
HMRC
Digital
Apprenticeship
Service
Skills Funding
Agency
Apprenticeships for smaller employers (c100,000)
Less change in 2017-18 for
those outside levy but plans to
make co-investment
compulsory
Smaller employer
Apprentice
Registered
Training
Organisation
If employers
aren’t paying
the levy, they
pay directly
Payment on
confirmation training
and employer payment
(both via ILR)
Digital
Apprenticeship
Service
Skills Funding
Agency
Apprenticeships and colleges
Colleges
Apprentices
Funding
Sub-contracted
16-18
71,000
£280m
22%
Adult (19+)
220,000
£273m
41%
Total
290,000
£553m
31%
The opportunity and the issues for colleges
• Colleges: “profile, relationships, town centre facilities, qualified staff”
• Levy paying employer have purchasing power from 2017
• Smaller employers required to co-invest
• Apprenticeship standards in flux
• Most college apprentices in health/public services, administration,
retail/commercial and engineering
• Are there opportunities in retail, IT, finance, creative arts or education?
Thinking about sectors
Colleges
% of workforce
apprentices
% of workforce
graduates
Other services
2.8%
42%
Health, care, public
1.9%
63%
Construction
0.6%
27%
Retail / commercial
0.2%
26%
4 sectors
Public sector targets
• 1.7% apprentices (less than 2 in 100)
• 2.3% the 2020 target (more than 2 in 100)
Rethinking your apprenticeship relationships
Sector group/
trade association
Advisors /
Brokers
Employer
College
Subcontractors /
wholly owned
training company
Digital
Apprenticeship
Service
Institute for
Apprenticeships
Assessment
organisation
Apprentice
Parents/
Family
Apprenticeships tips for FDs
Your own apprenticeship business
• What’s your market? Sectors, employers, locations?
• What’s your service? What programmes?
• How’s it managed? In-house? Distributed? Subcontracted?
Working out the changes
• Impact of the levy, co-investment and the new standards
• What are your full costs, marginal costs & likely income?
• How will you sustain a commercially viable service?