On 6 April 2017 the way the government funds apprenticeships in England is changing with the introduction of the Apprenticeship Levy.
The Levy is one element of the government’s reforms to increase the number of apprenticeships to three million by 2020.
The Levy only applies to employers with a payroll of over £3 million a year, although this does not mean that the Levy will not be payable by small schools. In fact, it will affect nearly all maintained schools, (as their employer is the local authority), most multi-academy trusts and some larger standalone academies.
Apprenticeship Levy on Maintained schools
For maintained schools, it will be critical to try and ensure access to the funding the school has paid and for schools to develop plans for spending their share of the funds. It may be necessary to make a business case to your local authority (LA) as soon as possible to claim this back. However, there is currently no requirement for LAs to ring-fence each school’s funding. Teaching unions such as the National Association of Head Teachers (NAHT) are urging members to begin dialogue with their LA about this as soon as possible.
If your school is a maintained school and you have still not heard from your LA about the Levy, you may wish to make contact to see what it plans to do. Also, if payroll is not provided by the LA, the maintained school will need to liaise with both its payroll provider and the LA on this, to ensure the correct payment is made.
Apprenticeship Levy on Voluntary aided and foundation schools
Voluntary aided and foundation schools should be excluded if the salary bill falls under the threshold, as technically the employers are the governors or the school itself. However, confusion could possibly occur where the LA is still the payroll administrator as HMRC could treat them as one employer if there is one payroll number. These schools may need to separate out their payroll number with the LA, if they want to be treated as the separate employer that they are.
Local Government Association
The Local Government Association (LGA), which represents 370 councils in England and Wales wants the rules to be changed to put all schools on an equal footing. The LGA says the Levy will unfairly hit the finances of about 9,000 small community schools, usually primaries, with a total of 2.8 million pupils.
Similar size academies, where the academy trust is the employer, will be exempt. The same is true of some faith and foundation schools, where the governing body is the employer. "It is discriminatory," said Richard Watts, chairman of the LGA's Children and Young People Board. The LGA says all schools with a wage bill of less than £3 million a year should be exempt from the Levy.
The NAHT warned that while 0.5% might not sound like much, "it comes in the context of school budgets being at breaking point already". "It's another example of government policies hurting schools," said NAHT Head of Policy, Valentine Mulholland, "We would definitely support the LGA's call for small local authority schools to be treated in the same way as stand-alone academies."
Just the other week the DfE published a guide for schools about the Apprenticeship Levy.
Each organisation will receive an annual allowance of £15,000 to offset against the required amount. This is likely to put larger multi-academy trusts at a disadvantage, because while each secondary school subject to the Levy technically has access to the £15,000 allowance, trusts with larger pay bills and therefore much larger levies, will still only receive £15,000 each for offsetting.
How do you pay and what can you spend?
The Apprenticeship Levy will be collected by HMRC and paid into a new digital account. These digital funds can be accessed by Levy payers (local authorities for maintained schools) to fund the training and assessment of apprentices – the idea being that employers paying into the scheme can get back what they put in.
Naturally there are rules about how the funds can be spent. The funding can only be spent on the training element of the apprenticeship, and not for salaries or funding a new apprenticeship. The funds can only be spent on training from a government-approved training provider. Details of these providers will be included on a Register of Apprenticeship Training Providers (RoATP).
Public Sector Apprenticeship Targets
The changes and obligations don’t stop there. There are in fact two new initiatives relating to apprenticeships which should be considered separately because they are based on different thresholds, albeit they do impact on each other.
The second initiative is the Public Sector Apprenticeship Targets. These targets will come into effect for all public sector organisations with more than 250 employees (FTE) from April 2017. The point of the Apprenticeship Levy is to get businesses to pay for the training of apprentices whether they use them or not. Previously it was funded by the government.
Busting myths and getting more information
There are some understandable myths that apprentices must be new staff, mainly youngsters, in new job roles, and primarily in trade occupations. However, apprenticeship training is available for existing staff of all ages, in a wide variety of occupations – and increasingly at advanced and higher levels – provided they have a skills need. Schools can therefore use the Levy as an opportunity to review their staffing needs, both current and future, and identify areas where apprenticeship training could help to improve the skills of existing staff, or help to plan for future requirements.
These funds must be used within 24 months of the Levy being paid however, so it is important that schools that are Levy payers are prepared to take on apprentices as soon as possible after it is implemented in April 2017 so they do not lose these funds.
Still unsure about your requirements?
To assist schools and academies in understanding all these new initiatives and demands on schools, One Education are offering Apprenticeship Levy training, in partnership with the Manchester Growth Company, the largest provider of apprenticeships in the North West.
This session will provide more detailed understanding - not only about your obligations, but the practical implications of the Apprenticeship Levy for schools and academies. We will also highlight the initiatives which are available to maximize the benefits of these changes, including the new Trailblazer Apprenticeship Standards.