Introducing the apprenticeship levy

Introducing the apprenticeship levy

The apprenticeship levy, introduced by the UK government, comes into force in April 2017. Over the next year, Interserve will bring you the latest information on the issue via a series of blog posts.

What is the apprenticeship levy?

The UK government has set a target of increasing the number of people who start an apprenticeship to three million over the course of this parliament.

Currently, the majority of apprenticeships are government funded. Once the apprenticeship levy is introduced, all private and public companies with payroll costs of more than £3 million will fund their own apprenticeship costs.

Employers will pay an employee levy of 0.5 per cent of payroll, deducted in the form of a payroll tax collected by HM Revenue and Customs to fund their apprenticeships.  Companies paying into the levy will also get an additional 10 per cent to use to fund apprenticeships.

The levy is expected to raise around £3 billion per year by 2020 – almost double the current expenditure on apprenticeships. The amount raised will be reinvested back into apprenticeships.

Why is the levy being introduced?

The apprenticeship levy is being delivered among a series of other reforms focused on improving the quality of Technical and Professional Education (TPE) in the UK. An Institute of Apprenticeships will also be created to advise and oversee the Government’s drive for higher quality apprenticeships.

We need to improve the skills available to UK employers and address the poor standard of TPE in the UK when compared to competitor nations. This means we need to focus as much on vocational education as we do on academic education to encourage students to take up careers where the skills shortages are greatest, such as engineering.

How are apprenticeships changing?

Apprenticeships are a great way for employees to study and gain hands-on experience at the same time. Currently, apprentices are assessed on particular tasks and are typically awarded a certificate or NVQ. These apprenticeships are generically described as ‘Frameworks’.

In an attempt to raise the quality of apprenticeships, the government is moving away from Frameworks and is bringing in a new set of ‘Standards’. They are intended to respond to employers’ needs better than Frameworks and consist of four key elements:

1.    Skill

The skills required for a job are usually gained by working alongside more experienced colleagues. This training is therefore generally delivered by the employer.

2.    Knowledge

Some of the knowledge needed for a role can’t be easily learnt ‘on the job’. Training providers can help with e-learning, peer learning, project work and college classes. Under the new ‘Standards’ it is a requirement that 20 per cent of apprentices’ time will be spent on ‘off the job’ training.

3.    Literacy, Numeracy and ICT

The general requirement is to have a minimum of Level 2 in Functional Skills (English and Maths), which is just below GCSE standard. Higher level Maths, English and ICT skills may be required for higher level apprenticeships, as apprenticeships can now be done all the way up to Masters Degree level. People on degree apprenticeships will split their time between university study and the workplace – gaining a full bachelor’s or master’s degree while earning a wage and getting practical experience in their chosen profession.

4.    End point assessment

Apprentices will need to demonstrate their capability through a rigorous end of course assessment, which could include:

  • Written exams
  • An interview
  • Production of something they have made
  • Observed practice
  • Assessment via a portfolio

Apprentices will then be graded upon completion.

Make sure your apprenticeship programmes comply with government standards

The Government has introduced guidelines on what counts as an apprenticeship. For a programme to be classified as an apprenticeship, it must meet the following requirements:

  • The minimum apprenticeship length is 12 months
  • All apprentices must be employed for at least 30 hours
  • An apprentice agreement must be signed by the employer and the apprentice before their apprenticeship starts
  • The programme must comply with funding rules for apprenticeships

Where next?

The government will continue to release information on the legislation surrounding the apprenticeship levy. Visit our blog over the next 12 months for the latest on what the levy means to apprentices and businesses.

The Interserve Society Report: are apprenticeships the path to success? – Adrian Ringrose discusses the findings from Interserve’s 2016 Society Report.

Early careers – Our wide range of apprenticeships reflects the diversity of our business. Interserve apprentices could find themselves working on a multi-million pound construction or facilities management project, making a real difference from day one.

Interserve Learning & Employment – Our aim is to redefine the future of people and places by delivering education and work-based learning that will support economic growth.