The launch date for the Apprenticeship Levy is fast-approaching, but despite its impending introduction, many organisations in the UK are still feeling a bit in the dark about its implications.
Those with workforces spread across the various nations that make up the country face added complexity, given the devolved skills policies of Wales, Scotland and Northern Ireland.
In this guide, we’ll investigate the lay of the Levy land for organisations with parts - or all - of their workforce situated outside of England and advise on how those in this situation can best engage with the Levy and avoid missing out.
How paying the Apprenticeship Levy works for organisations with workers in devolved countries
The Apprenticeship Levy is a UK-wide initiative. This means any employer with a total annual pay bill of more than £3 million will have to pay into it, regardless of where their workforce is situated.
However, since Apprenticeships are part of the portfolio of policies that have been devolved to individual nations, you’ll only be able to access the funds you’ve paid in - plus the government’s 10% top-up - on the amount that covers your workforce in England.
For countries other than England, the Barnett formula (whereby funding is allocated according to population size and the extent of the devolved powers of devolved nations) will be used to calculate the share of the Levy pot they receive.
While the devolved nations of the UK do have their own Apprenticeship programmes in place, the funding they’ll receive from the Levy won’t be ring-fenced, which means they’re under no obligation to use it on these initiatives.
What do Scotland, Northern Ireland and Wales plan to do about the Apprenticeship Levy?
The response of the devolved nations has been far from unilaterally positive and worries have been expressed around how the funding changes will impact existing training initiatives.
In its consultation on the impact of the Apprenticeship Levy, the Scottish government sought to gather the views of representatives from the private sector, education and training providers and the public sector.
In its review of the 374 responses it received, it was found:
- Three-quarters of respondents agreed that Apprenticeship Levy funding should be used to support wider workforce development initiatives.
- Nearly 80% favoured using the Levy to support growth in graduate-level Apprenticeships.
- Two-thirds supported using Levy funds to help unemployed people find work and help employers to meet their workforce development needs.
However, the majority of respondents didn’t feel that the Scottish government needed to alter its current target of 30,000 modern Apprenticeship starts each year by 2020.
Those who took part in the survey also favoured a more flexible approach to how Levy funding could be used than that of England, which confines this solely to training and end point assessment costs.
Plans are in place for the Scottish Apprenticeship Advisory Board to reflect on the consultation’s findings and concoct firm plans on how to use the Levy funding ready for the government’s 2017-18 budget proposals, however, as of right now - nothing firm has been agreed.
“We have involved employers in every step of the process and kept them fully informed in our discussions because we want to make sure they feel the benefits of the levy, and don’t just see it as an unnecessary financial burden,” said Scottish Minister for Training and Employability Jamie Hepburn.
“The UK Government forced this levy on Scotland without consultation however given the position we are now in, we have committed to developing an approach that is more flexible and broader than is currently being proposed in England, helps young people, meets the needs of businesses and supports inclusive economic growth.”
Northern Ireland’s response to the introduction has been even less favourable than Scotland, with Finance Minister Mairtin O Milleoir claiming that it would be of “no benefit” to the nation’s budget.
He explained that, due to funding changes and allocation via the Barnett Formula, the launch of the Levy would lead to a real-terms loss of budget for Apprenticeships in the country.
Branding the Levy’s introduction ‘bad news’ for Northern Ireland, Economy Minister Simon Hamilton announced that a ‘short and focused’ consultation would be launched to garner the opinions of those who would be impacted.
However, as with Scotland - nothing concrete has been agreed in terms of how the nation will be moving forward in terms of post-Levy training provision.
In its Q&A on the Apprenticeship Levy, the Welsh government highlighted that funding changes would result in a real-terms reduction to its budget in the next few years.
Similarly, it stated that there were no plans in place to roll out an English-style digital voucher system for companies looking to procure training and said it was ‘unlikely’ that vouchers from accounts held in England could be redeemed in Wales.
“We have seen no evidence that a voucher system would improve quality within the system. It would though introduce bureaucracy for employers and uncertainties as to how non levy employers would be supported,” said the report.
However, it was noted that employers with a workforce in Wales don’t have to wait until the Levy’s introduction to take advantage of the existing Apprenticeship programme.
The Welsh government went on to assure employers with a cross-border workforce that they sought to maintain flexibility in terms of training procurement, but warned that the issues involved in navigating the two systems were complex and would likely take ‘some time’ to progress.
What about employees who work in England but live elsewhere?
The rules around this are, thankfully, fairly simple. An employee’s eligibility for Levy funding and co-investment will be based off their registered place of work (as determined by HMRC), however, they will need to be registered on a framework/standard that’s approved in England.
Engaging with Apprenticeships before the Levy
No matter what nation of the UK your organisation operates in, you don’t have to wait until the Levy’s introduced before you take on an apprentice or up-skill your current staff.
In Scotland, you can utilise its Modern Apprenticeship programme to help your company develop the skills it needs to thrive, while in Wales, this is handled by the country’s Education and Skills department and in Northern Ireland, you can find out more on the NI Direct website.
And if you’re in England, you can use gov.uk to find out more about taking on apprentices, or get in touch with a reputable provider, like The Skills Company to discuss your workforce development needs.