UK apprenticeship levy: Five myths busted UK apprenticeship levy: Five myths busted

UK apprenticeship levy: Five myths busted
05 Mar 2018

The UK’s National Apprenticeship Week 2018, which takes place between 5-9 March, is a week-long celebration of everything to do with apprenticeships. By bringing employers and apprentices from across the country together, it is intended to showcase how such training works for individuals, businesses, communities and the wider economy.

The provision of apprenticeships in the UK is now supported by a controversial levy, which was introduced in April 2017. Sue Husband, director of the National Apprenticeship Service challenges some of the key myths she sees as having built up around it:

Myth #1: All businesses must pay

Only employers whose wage bill is more than £3 million (US$4.1 million) are liable to pay the levy. They are required to contribute 0.5% of their pay bill into a fund each month, which can then be spent on apprenticeship training for their business. For every £1 (US$1.38) contributed, the government adds 10p (US$0.14).

Employers with an annual pay bill of under £3 million are not obliged to pay, but the government will still fund 90% of the costs of their apprenticeship training.

Myth #2: Levy payers are required to take on more apprentices

Eligible employers must pay the levy regardless of whether they employ an apprentice or not. It is not mandatory to spend these payments, but if you fail to do so, your business could lose out. Some employers wrongly see the levy as a payroll tax and, as a result, are foregoing access to a pot of money and new skills.

Taking on apprentices helps employers to cost-effectively grow their own talent and develop a motivated, skilled and qualified employee base in line with their workforce needs. This means it is in every employer’s interests to use their levy payments to invest in the quantity and quality of apprenticeships that their business requires.

Myth #3: The levy gives employers less control

The aim of the levy is to make it easier for employers to choose the apprenticeship training that best suits their needs. While the previous model was provider-led, available funds can now be spent on whichever apprenticeship training the employer chooses, which means that providers have to be more responsive to their needs.

Employers’ levy contributions are paid into a flexible service account that is used to pay for their apprenticeship training of choice. If an individual employer is a member of a group of companies that pay the levy together, the group can opt to collect their funds into a single account.

The government also intends to allow levy-payers to transfer funds to other employers through the apprenticeship service in future.

Myth #4: Levy funds cannot be used to train existing staff

Employers can use their levy funds to either hire new recruits or train and upskill their existing workforce – and everyone is entitled to start an apprenticeship at any point in their life, no matter what their age, background or career level is.

This means businesses have the option to create new apprenticeship schemes, increase the number of apprentices they recruit and up-skill their existing workforce with higher or degree-level apprenticeships. Levy funds can even be used to train existing employees holding prior qualifications - as long as the apprenticeship they take is relevant to their role and the most appropriate way of developing their career.

Myth #5: Apprenticeship take-up is low

By 2019/20, the goal is to have invested £2.5 billion (US$3.44 billion) from the levy in boosting the quantity and quality of the UK’s apprenticeships. More than 1.2 million people have started an apprenticeship since May 2015, and the government remains committed to reaching its target of three million in England alone by 2020.

The government is also using the levy to invest £60 million (US$83 million) in supporting apprenticeship training in the poorest areas in the country and among apprentices with learning or other disabilities in order to help promote social mobility.

 Sue Husband

Sue Husband is director of the UK's National Apprenticeship Service, where she leads the agency's work. She was previously head of education for the UK at McDonalds.

The UK’s National Apprenticeship Week 2018, which takes place between 5-9 March, is a week-long celebration of everything to do with apprenticeships. By bringing employers and apprentices from across the country together, it is intended to showcase how such training works for individuals, businesses, communities and the wider economy.

The provision of apprenticeships in the UK is now supported by a controversial levy, which was introduced in April 2017. Sue Husband, director of the National Apprenticeship Service challenges some of the key myths she sees as having built up around it:

Myth #1: All businesses must pay

Only employers whose wage bill is more than £3 million (US$4.1 million) are liable to pay the levy. They are required to contribute 0.5% of their pay bill into a fund each month, which can then be spent on apprenticeship training for their business. For every £1 (US$1.38) contributed, the government adds 10p (US$0.14).

Employers with an annual pay bill of under £3 million are not obliged to pay, but the government will still fund 90% of the costs of their apprenticeship training.

Myth #2: Levy payers are required to take on more apprentices

Eligible employers must pay the levy regardless of whether they employ an apprentice or not. It is not mandatory to spend these payments, but if you fail to do so, your business could lose out. Some employers wrongly see the levy as a payroll tax and, as a result, are foregoing access to a pot of money and new skills.

Taking on apprentices helps employers to cost-effectively grow their own talent and develop a motivated, skilled and qualified employee base in line with their workforce needs. This means it is in every employer’s interests to use their levy payments to invest in the quantity and quality of apprenticeships that their business requires.

Myth #3: The levy gives employers less control

The aim of the levy is to make it easier for employers to choose the apprenticeship training that best suits their needs. While the previous model was provider-led, available funds can now be spent on whichever apprenticeship training the employer chooses, which means that providers have to be more responsive to their needs.

Employers’ levy contributions are paid into a flexible service account that is used to pay for their apprenticeship training of choice. If an individual employer is a member of a group of companies that pay the levy together, the group can opt to collect their funds into a single account.

The government also intends to allow levy-payers to transfer funds to other employers through the apprenticeship service in future.

Myth #4: Levy funds cannot be used to train existing staff

Employers can use their levy funds to either hire new recruits or train and upskill their existing workforce – and everyone is entitled to start an apprenticeship at any point in their life, no matter what their age, background or career level is.

This means businesses have the option to create new apprenticeship schemes, increase the number of apprentices they recruit and up-skill their existing workforce with higher or degree-level apprenticeships. Levy funds can even be used to train existing employees holding prior qualifications - as long as the apprenticeship they take is relevant to their role and the most appropriate way of developing their career.

Myth #5: Apprenticeship take-up is low

By 2019/20, the goal is to have invested £2.5 billion (US$3.44 billion) from the levy in boosting the quantity and quality of the UK’s apprenticeships. More than 1.2 million people have started an apprenticeship since May 2015, and the government remains committed to reaching its target of three million in England alone by 2020.

The government is also using the levy to invest £60 million (US$83 million) in supporting apprenticeship training in the poorest areas in the country and among apprentices with learning or other disabilities in order to help promote social mobility.

 Sue Husband

Sue Husband is director of the UK's National Apprenticeship Service, where she leads the agency's work. She was previously head of education for the UK at McDonalds.