As the government looks to push apprenticeships as a great way to kick-start your career, they also announced the creation of the ‘Apprenticeship Levy’ to help pay for it all. With the promise of 3 million apprenticeship starts by 2020, the levy will see employers asked to contribute to the cost of funding them. However, a recent release by the government has revealed that there will be delays in implementing the levy – so what does this mean for apprentices?
As it stands, the levy will see the government taking 0.5% of the pay bill of any company with a bill of higher than £3 million. Those with a lower pay bill will have any takings offset by a £15,000 allowance. The money itself will be ring-fenced so that it can only be spent on training apprentices, with all levy-paying employers set to receive a 10% top up on their monthly levy contributions. So far it all seems fairly straight-forward, although there is set to be more information released this month (June, 2016). This extra info is to be followed in October by “full, draft funding and eligibility rules” and the “final detailed funding and eligibility rules” including guidance on how to “calculate and pay” the levy set to be released in December.
Although details of the levy are moving forward, there is some concern among employers about how quickly it will come into force, with reports saying the levy will not be fully operational until 2020, despite being introduced from April 2017. Staggering the introduction of the levy will certainly help employers come to terms with the system, although there are fears that even this three-year launch may prove to be too ambitious.
Colleges are still waiting for information on how the levy will be managed, as well as what impact it will have on funding for next year, especially with the changes coming in April – months before the end of the 2016 / 17 academic year.
Fortunately, this should not have a detrimental effect on students who are considering or currently taking apprenticeships, and hopefully the phased introduction of the levy should be something that only employers and training providers themselves need to worry about. That said it will be interesting to see if funding via the levy has any effect on apprenticeship wages?
However, as we await more information as to exactly how the levy will work, it seems that the push to increase the number of apprenticeships in the UK will not happen overnight. Instead we can expect to see some sectors and employers taking up the mantle before others as the government seeks to protect smaller employers from suddenly facing a large bill for the levy and any extra costs associated with setting up apprenticeships.
Either way, it is clear that the levy is a step in the right direction – creating a funding model that should see focussed, quality apprenticeships across a range of sectors. Of course, apprenticeships are already available in a number of areas and you can search for a range of apprenticeship openings in your own area right here on NotGoingtoUni.
Hopefully the levy will help continue the trend of falling youth unemployment as dedicated workplace training becomes a widely recognised route to a great career!