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How the apprenticeship levy will work

This article explores the implementation of the apprenticeship levy in the UK, its implications for large and small employers, and the opportunities and challenges it presents for colleges and other training providers. It also provides tips for businesses and organizations on adapting to the changes and sustaining a commercially viable apprenticeship program.

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How the apprenticeship levy will work

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  1. How the apprenticeship levy will work Julian Gravatt, Assistant Chief Executive 17 May 2016

  2. 3 million apprenticeships + the levy “We have already delivered 2.2 million new apprenticeships over the last five years. Over the next five years we will deliver three millionmore and ensure they deliver the skills employers need” Conservative manifesto, 2015 “While many firms do a brilliant job training their workforces; there are too many large companies who leave the training to others and take a free ride on the system. So we are going to take a radical, and frankly long overdue approach. We are going to introduce an apprenticeship levy on all large firms.Firms that offer apprenticeships can get more back than they put in” Summer budget speech, 2015

  3. 3 million apprenticeships + the levy “Apprenticeship spending will double over the decade” 2015 spending review • … via a new hypothecated tax

  4. Apprenticeships for large employers (c25,000) HMRC Large employer Levy (0.5% of payroll) Employer directs recipient and price Digital Apprenticeship Service Apprentice Skills Funding Agency Registered Training Organisation Payment on confirmation of training (ILR) and employer authorisation

  5. Apprenticeships for smaller employers (c100,000) Less change in 2017-18 for those outside levy but plans to make co-investment compulsory Smaller employer Digital Apprenticeship Service If employers aren’t paying the levy, they pay directly Apprentice Skills Funding Agency Registered Training Organisation Payment on confirmation training and employer payment (both via ILR)

  6. Apprenticeships and colleges The opportunity and the issues for colleges • Colleges: “profile, relationships, town centre facilities, qualified staff” • Levy paying employer have purchasing power from 2017 • Smaller employers required to co-invest • Apprenticeship standards in flux • Most college apprentices in health/public services, administration, retail/commercial and engineering • Are there opportunities in retail, IT, finance, creative arts or education?

  7. Thinking about sectors Public sector targets • 1.7% apprentices (less than 2 in 100) • 2.3% the 2020 target (more than 2 in 100)

  8. Rethinking your apprenticeship relationships Sector group/ trade association Employer Digital Apprenticeship Service College Governors Managers Teachers Institute for Apprenticeships Advisors / Brokers Apprentice Subcontractors / wholly owned training company Assessment organisation Parents/ Family

  9. Apprenticeships tips for FDs Your own apprenticeship business • What’s your market? Sectors, employers, locations? • What’s your service? What programmes? • How’s it managed? In-house? Distributed? Subcontracted? Working out the changes • Impact of the levy, co-investment and the new standards • What are your full costs, marginal costs & likely income? • How will you sustain a commercially viable service?

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