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Apprenticeship Levy: one year on

David Fields looks at how the first 12 months of the controversial Apprenticeship Levy has panned out

July 2018

The Apprenticeship Levy was introduced in April 2017, requiring all organisations (both public and private sector) with an annual pay bill of over £3m to pay 0.5% of their pay bill into a levy pot, which can be used for the training of apprentices.
Latest figures show that only £100m of the £1.3bn levy collected so far has been spent, with 195,200 apprenticeship starting between April and November 2017. This represents a 40% drop compared with 326,700 starts in the corresponding seven months in 2016.
So what’s caused this? First, employers have two years to spend their levy pot and some are quite rightly taking time to decide exactly how and where this is spent. Second, the levy can only be used to cover training costs and not the salary costs of apprentices or the additional administrative costs in running an apprenticeship scheme. And, third, awareness of the Apprenticeship Levy still needs to improve, something that the National Apprenticeship Service (NAS) is working hard to achieve.
The Local Government Association (LGA), which represents 370 councils in England and Wales, says significant changes to the Apprenticeship Levy are needed to achieve its potential. The complexity of the system, coupled with the fact that a number of key apprenticeship standards such as teaching and social care are not yet available, are crucial issues that need to be addressed to help increase the number of starts.
During House of Common’s Education Select Committee meeting this May, which looked at the quality of apprenticeship and skills training, Apprenticeship and Skills Minister Ann Milton stated that the public sector has been sluggish to take the apprenticeship programme up, seeing it as a burden rather than an opportunity.
CIPFA’s own experience with levy paying employers in the public sector has been positive. They are, however, faced with the additional burden of government procurement requirements as they look to select apprenticeship training providers. This has had an effect on the low number of apprenticeship starts to date, but the public sector will catch up quickly.
Ultimately, the apprenticeship policy will be a success, but it does need a few tweaks along the way to help it achieve the government’s stated aim of achieving three million starts by 2020. Improvements needed include more flexibility with the off-the-job requirements; reducing the complexity of the digital apprenticeship system (is a double lock really required?); ensuring new standards and End Point Assessments are made available; improved incentives for SMEs to take on and train apprentices; and, importantly, promoting awareness and the benefit of employing apprentices.
• David Fields, CIPFA

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