Introduced in April 2017, the Apprenticeship Levy of 0.5% of pay bill applies to all employers. However, because every employer is given a £15,000 allowance to offset against their levy liability, in practice only those employers with an annual pay bill of over £3 million will pay the levy. So if your monthly pay bill is £250,000 your levy liability is £1,250 (0.5% of £250,000). This is the same as the allowance for the month (£15,000/12). Therefore, you will not pay any levy. If your monthly pay bill fluctuates above and below the £250,000 there may be months where you will have a levy liability. However, because the allowance is an annual allowance, any allowance you don’t use in a month can be carried over to the next month. Each Levy payment is due at the time you run payroll and submit your Real Time Data submission to HMRC. The Levy Funds you pay in are deposited into a Digital Account the month after they are paid to HMRC. So the Levy paid on your April payroll will not appear in your digital account until the end of May. In addition to your contribution, the Government will pay a 10% top-up contribution for each month you pay the levy. Funds in your digital account can be used to fund training and assessments on recognised apprenticeship courses. You can not use them to fund salaries. The apprentices can be any age and can be existing members of staff looking to gain qualification. Levy funds do have an expiration date of 24 months after the funds are paid into the levy account. It is a use it or lose it pot of money. If you want to spend more than you have in your digital account you can access the co-investment funding route for eligible apprenticeship training and assessment, whereby the Government pays 90% of the training and assessment costs.

October 2018

Apprenticeship levy: new flexibilities

Following lobbying by the LGA, the government has announced a package of reforms to the Apprenticeship Levy including increasing the amount of Levy funds that can be transferred to another employer from 10 per cent to 25 per cent, and extra funding to speed up standards development. The change to the transfers policy will be effective from April 2019. Find out more and read the LGA response.

For employers who are not required to pay the Apprenticeship Levy or for those who pay the levy but have exhausted all their funds they can access co-investment funds. This means that for qualifying apprenticeships the government will fund up to 90% of the funding band price for the training and assessment with the remaining 10% balance being payable by the employer. For apprenticeships commencing after 1 April 2019 the co-investment funding provided by the Government increased to 95%, meaning that an employer only needs to fund 5% of the total apprenticeship cost.

Public Sector Target for 2021/22 Confirmed

The government finally confirmed the 2021/22 target will remain the same as before – public bodies with a headcount of 250 employees or more on 31 March 2021 will need to create apprenticeship starts equivalent to 2.3% of their headcount between 1 April 2021 and 31 March 2022. That means if your headcount on 31 March is 1,000 employees, you would need to create 23 apprenticeship starts during the course of the year. If your headcount is 249 or less, you are exempt from the target.

Other things to be aware of:

• This is a new target and not a continuation of the old one. Therefore if you meet the target in 2021/22 you will be considered to have met it in full, rather than in the current system where you would need to have achieved an average performance of 2.3% apprenticeship starts across the four year period to have met the target;
• There are again no negative consequences for employers if the don’t meet the target. As with the current target, you only need to ‘have regard’ to it. If you miss the target, you will be expected to explain how you have had regard to it in your return to government during the reporting period in the same way you do now;
• The guidance published by government on the new target includes the following line:

In response to queries where the Council/Local Authority (LA) is the employer for schools and fire and rescue services, each LA may choose to show the information required for these organisations separately within their Returns.

You can read the government’s guidance in full here: https://www.gov.uk/government/publications/public-sector-apprenticeship-target

On 22 November 2018, the government published the first year’s worth of public sector target performance data, covering 2017/18. The spreadsheet includes data for all public sector organisations that submitted returns, including headcount, starts and progress towards the target, as well as aggregate data for the various sub-sectors of the public sector like local government, NHS and Police.

The numbers provided mixed news for local government. On the one hand, our numbers were up from the previous year. The LGA’s projection of 11,000 starts held firm, with 11,178 starts reported to government from the sector (up from our estimate of 6,000 starts taking place in the sector in 2016/17). We were the only part of the public sector to suffer a fall in headcount (down 5% year-on-year), yet still delivered a large increase in starts, something noted by the government in its data release. Despite the challenges this is an impressive performance and demonstrates local governments commitment to delivering more apprenticeship starts.

However, this obviously leaves us someway short of our overall target, and we were outperformed by other parts of the public sector. Local government as a whole achieved 0.9% of its headcount as apprenticeship starts in 17/18, against a public sector average of 1.4%. Almost all areas of the public sector failed to meet the target of 2.3%, save for the Armed Forces, who managed 9.1%. Local government also ran behind the civil service (1.3%) and NHS (1.2%) but was tied with the fire service (0.9%) and ran ahead of the Police Service (0.2%).

Although they can’t provide definitive numbers as they did not collect this data separately, the government has been able to estimate that 6,300 apprenticeship starts took place in schools in 17/18. Around half of these starts took place in maintained schools (included within the overall numbers reported for local government above).

Data was also published for each individual public sector body on their own performance towards meeting the target. 34 local authorities, plus the GLA and the GMCA (n.b. the body itself rather than the 10 LAs, which reported separately) met or exceeded their public sector target in 17/18, and a further 13 achieved over 2% and just missed out.

An employee undertaking an apprenticeship must undertake 20% of their working time as ‘off the job training’ (OTJT). This is 20% of their actual contractual hours. So a person contracted to work:

• 30 hours must undertake 6 hours OTJT
• 35 hours must undertake 7 hours OTJT

In the early stages of apprenticeships they were designed with the ‘day release’ approach in mind. However, modern apprenticeships don’t require the OTJT to be in a class room or out of the workplace. Instead, employers are actively encouraged to think creatively and use this ‘off the job’ time for activities that will add value to the organisation while giving the apprentice valuable learning opportunities.

Some examples of activities that you could consider include:

• undertake special project linked to the learning objectives of the apprenticeship,
• shadow a colleague,
• work with a coach or mentor,
• attend a conference,
• on-line learning,
• industry visits to other organisations to understand how they work,
• visits to other departments within the organisation to understand how the business works,
• completing written material, such as workbooks, which are provided by the training partner,
• preparation for a professional discussion,
• gathering evidence for a learning/professional portfolio or reflective discussion, or
• participation in simulation exercises.