Making the most of the Apprenticeship Levy

Two years on from the start of the Apprenticeship Levy and there is still confusion among large private and public sector employers about the obligations of the levy and how to make best use of it.

Mark Dawe, Chief Executive of the Association of Employment and Learning Providers (AELP)

Mark Dawe, Chief Executive of the Association of Employment and Learning Providers (AELP)

11 April 2019

For employers that are new to the apprenticeship programme, the funding and regulatory system can seem complex. But with the aid and expertise of high-quality apprenticeship training providers, you can realise the benefits of apprenticeships and make a tangible difference to productivity within your organisation.

How can I claim my levy back? 

You will have been notified by HMRC if your organisation has to pay the levy. An employer has to have an annual payroll of £3m or more to be liable. But if you want to claim your levy back – with a 10% top-up added by the Government to use for apprenticeships within your own workforce – you must register for a digital apprenticeships account. In claiming back your share of the levy, you can only use it to fund apprenticeships that meet official standards. 

What are the benefits for my organisation?

At the beginning of the levy, there were finance directors who instructed HR departments to start employing apprentices simply to get their organisation’s money back. However, the vast majority of the larger levy payers recognise that it is the value that apprenticeships bring to an organisation as part of an embedded workforce development strategy that makes engagement in the programme so worthwhile.

In a survey commissioned by the Government in 2017, 86% of employers reported benefiting from ‘the development of skills relevant to the organisation’ by hiring apprentices.  A further three-quarters highlighted 'improved productivity, better quality of product or service, and higher staff morale’. Staff turnover is often reduced, and while apprenticeships are a great way of recruiting new talent, costs can be saved by using the programme to up-skill existing staff to ensure your organisation has the capable personnel it needs.

Based on feedback from our 900 apprenticeship provider members who support over 350,000 employers in meeting their skills needs, we know that the biggest attraction for employers is that their apprentices are learning new skills, knowledge and behaviours on the job, that are specifically relevant to that job. It’s a common myth, though, that these aren’t transferable to other positions.

Many employers also like apprenticeships as drivers of social mobility, because they offer young people a high-quality alternative route to a successful career. This could mean starting at intermediate level (level 2) and progressing all the way up to level 6 or 7, including the increasingly popular degree apprenticeship.

How you can make the most of the levy

Our advice to housing associations and trusts is to find a government-approved training provider with the necessary sector expertise and experience to advise at no extra cost on the establishment and running of an apprenticeship programme that works best for you.

The programme could include the three housing management standards and a choice of a huge range of other standards that cover back office functions such as finance, IT, and HR. We also highly recommend hiring a young digital marketing apprentice who can bring immediate benefits.

If you are unable to use up all of your claimed back levy, then up to 25% of it can be transferred to other employers of your choosing.

What if my organisation doesn’t need to pay the levy?

For associations and trusts that don’t pay the levy, a provider can advise on how to take advantage of the 95% government subsidy to cover the costs of training and assessing an apprentice.

Young people and adults are searching out apprenticeship opportunities for themselves because they see the advantages of the programme. It is therefore an ideal time for employers to get on board and share from the benefits themselves.

We’ll be discussing how to capitalise on the Apprenticeship Levy at our HR in Housing Conference on 24 April in London, and as part of our Great Places programme we are exploring the potential of the levy to support skills development and employment opportunities at local level – final recommendations are due out in June.

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