With the launch of the Apprenticeship Levy fast approaching, many organisations understandably have their proverbial plates full with preparation.
But with the government’s ambitious target of three million apprenticeship starts by 2020 on the horizon, the first wave of changes the Levy is bringing into force will be far from the last we’ll see.
In this guide, we’ll explore what year two of the Apprenticeship Levy holds and what further changes we may see in apprenticeships before the close of the decade.
Before we delve into the nitty gritty of Apprenticeship Levy year two and beyond, it’s worth noting that there’s still a great deal of unknowns. In the run-up to the legislation's initial launch, the government faced a raft of criticism for last-minute changes and creating uncertainty for employers by withholding information.
In a similar vein, information on the future of the Levy is sparse, the details we do have are ambiguous and it’s unlikely we’ll get any concrete answers for some time.
From our interactions with employers, it’s clear that common misunderstandings persist in terms of exactly how the Levy will work in practice, which could cause potential problems in the near future.
Many are understandably keen to recoup their Levy funds, however, when it comes to deploying these, it’s a case of act in haste, repent at leisure.
One of the biggest stumbling blocks is around the length of standards and the pay-as-you-go nature of the Levy. So, for instance, if you’ve opted to invest in a qualification for a staff member that costs £5,000 in total, but the apprenticeship takes two years to complete, the payments will be spread out at £2,500 per annum.
If the Levy isn’t used as part of a concerted workforce development plan, there’s a danger of quickly reaching critical mass with apprenticeships and running out of employees to spend funds on.
To sidestep emerging issues like this, it’s important to think ahead and avoid knee-jerk training decisions. While it may be tempting to get the admin quickly off your plate while ensuring you’re not losing out on the Levy - by coming up with a long-term workforce development plan, you really can make the Levy work for you and get more bang for your buck.
To see what a plan like this looks like in practice, take a look at our Apprenticeship Levy Elevator programme.
As a practical example, if you’ve got a managerial staff member pegged for advancement, by planning their career path, it’s possible to make use of your Levy in a way that confers practical benefits for several years.
For instance, you could sign them up for a team leader/supervisor qualification and then, once complete, move them on to a Level 5 management qualification. It’s also worth noting that Level 6 qualifications exist with level 7 qualifications in development, so the amount of options on this front are set to expand significantly in the coming years.
Beyond alterations to funding, one of the biggest changes brought about the Levy is in how apprenticeships will work in practice.
As covered in our detailed guide on the new Trailblazer standards that are replacing existing SASE Frameworks, the government aims to enhance the practical benefits of apprenticeships by giving employers a say in how they work.
This process is a work in progress, however, and with more than 500 Trailblazer standards in the works, the government and employer-led groups are going to have to work hard to achieve their aim of having all existing frameworks replaced by 2020.
Only time will tell how well these are received by employers and whether they make headway in achieving their aim of boosting the UK’s productivity. A lengthy consultation process is also likely to be needed before we’re able to ascertain whether further alterations could be on the cards.
Similarly, if employers are enamoured with these new-style standards, we could see Trailblazer groups grow in popularity as more jump on board to have a say in shaping training for their sector and meeting the oscillating demands of ever-changing industries.
Extending the Apprenticeship Service Account
Levy-paying employers will be gaining access to their Apprenticeship Service Accounts (ASA) in February this year. As it stands, employers who aren’t paying the Levy won’t need to utilise this service when it comes to paying for apprenticeship training and assessment until at least 2018.
Details of what will happen after this and whether an extension of the ASA is on the horizon aren’t currently available, although we’re assured further advice will be issued well in advance of any changes in this area.
Devolved nations will decide what to do about the Levy
It’s fair to say Scotland, Northern Ireland and Wales aren’t overjoyed about the introduction of the Levy. As covered in our guide, many have decried the real-terms loss of funding they’ll see, as well as the impact on their existing apprenticeship provision.
Consultations on the issue are in various stages across the nations, but as of now, no concrete proposals are in place.
In December 2015, the government confirmed that the national AGE (Apprenticeship Grant for Employers) would continue to run until the close of the 2016-17 academic year to give organisations the chance to transition to Levy funding.
However, in some local authorities, this and other grants will potentially continue to run or be extended for a set duration beyond the introduction of the Levy. Since this will vary greatly depending on where you’re situated in the country, it’s advisable to check with your local authority for more information on their status.
Directing funds to other employers
In its initial proposals, the government stated its commitment to allow employers to direct Levy funds in their Digital Apprenticeship Service account to another employer - another company in their supply chain for instance.
As of 2018 (subject to a final value assessment), employers will be able to transfer up to 10% of the funds that enter their Digital Apprenticeship Service account each year to another organisation with a digital account.
This will be assessed and if it’s discerned to have a positive impact, could be expanded in the future. It’s also worth noting that until Brexit becomes a reality, organisations in the UK are still bound by EU State aid regulations and are responsible for ensuring they abide by these when transferring or receiving funds.
While we’ve hopefully shed some light on the future of the Levy, concrete information is still thin on the ground. If you’ve got any thoughts to share or questions to ask - be sure to let us know via Twitter or LinkedIn.
And if you’re looking for bespoke advice on how the Levy will impact your organisation, don’t hesitate to get in touch with our team of Levy experts today: