Levy forecasting
22/09/16
Nick Linford
Director at Lsect
The apprenticeship levy funding
2016-17
2017-18
2018-19
2019-20
£1.808
£2.010
£2.231
£2.450
As a tax on payroll, the levy income will be
dependent on the size of the economy
But…
• What does it have to pay for?
• How is it likely to be used?
• Do you think £2.45bn be enough?
What does the £2.45bn need to pay for?
• The levy top-up (10%)
£245m
• Levied employers funding per apprentice
until their levy pot runs out
£1bn?
• Subsidy for non-levied employers or
levied employers when the pot is
empty (90% proposed)
£700m?
• Remaining funding instalments for
apprentices on frameworks and standards
that started before 1 May (including the
three types of employer incentives that
are part of the standards ‘pilot’)
£500m?
But the £2.45bn also need to pay for…
• Fully-fund at the relevant upper limit 16-18 year olds when at an
employer with fewer than 50 people
• Fully-fund at the relevant upper limit 19-24 year olds formally in care or
who have a Local Authority Education and Healthcare plan when at an
employer with fewer than 50 people
• £471 for each level 1 and level 2 English and maths qual
to meet the minimum for the framework or standard
• 16-18 employer incentive (£1000 proposed)
• 16-18 provider incentive (£1000 proposed)
• 19-24 year olds formally in care or who have a Local Authority Education
and Healthcare plan employer incentive (£1000 proposed)
• 19-24 year olds formally in care or who have a Local Authority Education
and Healthcare plan provider incentive (£1000 proposed)
• Remaining funding instalments for apprentices on frameworks and
standards that started before 1 May (including the three types of
employer incentives that are part of the standards ‘pilot’)
• £150 a month per apprentice where they are eligible for additional
learning support, “plus additional costs based on evidenced need”
Incentives and Eng and Maths could easily cost £500m+
How is it the levy likely to be used?
So close to 20,000 employers will have
something in their levy pot – but system design
depends on many of them not using it
Consider, if you were running a big company would
you let your HR manager leave levy money unspent?
Easiest way to use it is place existing employees
on management apprenticeships.
Quiz!
25+ higher management apprenticeship frameworks
generate around £3k and starts August 2016 to April
2016 already more than whole of 2015/16
What % of 25+ higher apprenticeships
framworks do you think are in management?
83%
The rise of the manager apprentice
All age all level apprenticeships
starts % that are in management frameworks
12%
10%
8%
6%
4%
2%
0%
Now the 3rd most popular apprenticeships
Management standard will be best seller
> Upper-limit £9k cap and for all sectors
> Developed by Civil Service, Barclays, BBC,
HMRC, Boots, CMI etc
> CFA say there are 400,000 new managers a year
> 400,000 x £9,000 = £3.6bn
> Removal of allocations means no ring-fence for 16-18
(so technically all levy could be spent on 25+ managers)
> Flood-gates will open on 1 May
(no advantage to employer paying during the pilot)
> Universities (public and private) could corner the
market and utilise online (see Open University plan)
Do you think £2.45bn be enough?
Is ‘employer ownership’ compatible
with ‘social justice’?