There’s recently been a great deal of talk of training providers offering Apprenticeship Levy kickbacks and accusations of that some are actively manipulating costs.
In this guide, we’ll explore why it’s not feasible for either providers or employers to incentivise or otherwise seek make money off the Apprenticeship Levy and why attempting to do so could have serious repercussions.
Back in March, the Skills Funding Agency (SFA) highlighted concerns around emerging delivery models that were ‘contrary to the policy intent’ of the Apprenticeship Levy, including:
- Inflating training costs as a way to ‘refund’ the employer’s co-investment
- Funding ineligible costs to employers as subcontractors
- Claiming higher prices to fund non-English apprentices free of charge to employers.
It warned that these types of payments should not be made and went on to provide additional guidance on funding, stating:
“You must not pay incentives or inducements or any other payment not authorised by us to the employer in relation to any part of the apprenticeship programme”
The SFA also warned against returning, in total or in part, any employer contributions following the collection of co-investment.
Industry sources quoted by the CIPD’s People Management (PM) news service suggested the practice was rife among larger employers seeking incentives from providers:
“We’ve heard that some companies are saying ‘we’re paying a large levy – we’re going to use you as a provider, but you need to provide us with some kickback for using you’.”
Attempts at negotiating kickbacks weren’t limited to large employers either, with a view that some providers maybe tempted to artificially expand their training costs with a view to returning the employer’s investment out of the government’s pocket.
Incentivising the Apprenticeship Levy: What employers need to know
While even the updated funding guidance may leave the potential for ‘wiggle room’ around Apprenticeship Levy incentives - the bottom line is any attempt at this is directly against the intent of the legislation.
Both employers and providers are under financial pressure to deliver on the Levy, but once contributions are paid - the funds essentially become public money and attempts at creative reimbursement will be punished harshly.
Providers are at risk of having their ESFA (Education and Skills Funding Agency) contracts terminated, which means they’ll be removed from the Register of Apprenticeship Training Providers and lose the ability to deliver government-funded training.
Apprenticeship Levy funds, whether they’re collected from Levy-payers or via co-investment are solely to be used for the purpose of training and assessment of apprentices. Anything offered to you outside of this strict definition should therefore be viewed with suspicion.
And if you’re looking for bespoke advice on getting the most bang for your buck out of the Levy - without contravening government regulations - be sure to get in touch directly, or read our free Apprenticeship Levy guide: