THE JACE GUIDE TO THE APPRENTICESHIP REFORMS AND THE NEW LEVY 


 

 

JACE are an RoATP Approved Apprenticeship Provider

 

We are pleased to announce that JACE Training has successfully secured a place on the new Register of Approved Training Providers, allowing us to continue to deliver apprenticeship programmes from  1 May. This date coincides with the new funding rules for apprenticeships and implementation of a government Levy to fund apprenticeship training and help the UK to improve its productivity and secure business growth. To find out more about these important changes, then again please contact your local JACE office.



Why are there changes proposed to Apprenticeship delivery; What are the main changes; When will they come into effect; How will the changes impact upon my business? How can JACE Training help?

 

 

WHY are there changes proposed to Apprenticeship delivery?


To Increase Productivity


The government is keen to raise the profile of apprenticeship training as a genuine alternative pathway to the more traditional and academic route taken by school leavers, of  studying for ‘A’  levels, possibly followed by a University degree.

 

The driving force behind this government policy is the lack of productivity in the UK, compared with other nations.  It is felt that upskilling our workforce through relevant and high quality training will help reduce the skills’ gap. The apprenticeship model in other European countries is also considered to be a reason for their competitive advantage in the workplace.

 

The ambition of government is to raise the number of Apprenticeship starts to 3m by 2020, an estimated annual increase of circa 20%.

 

 

What are the main changes?


Switch from Frameworks to Standards


The current Apprenticeship model is made up of component parts, collectively known as a Framework. Typically, a Framework includes a vocational qualification which is accredited by an established and independent Awarding Body. Other areas of study include Maths, English and ICT; Employability Skills (including Rights and Responsibilities); and work related Health and Safety matters.

 

Employer ‘Ownership’


Traditionally, an apprenticeship Framework has been largely designed by the educational sector, to suit industry needs. However, the government feels that this current arrangement is too complex and that such training should be led by employers. A process has therefore been underway to convert these Frameworks into new Standards. A Standard is designed to be a simple, concise guide as to what a ‘work ready’ apprentice should look like, at the end of their training.  The Standards have been designed by ‘Trailblazer Groups’, which are largely made up of representatives from industry sectors i.e. employers are having a greater say and being put in ‘the driving seat’.

 

End Point Assessment


Trailblazer Groups have also been instrumental in deciding how to judge when an Apprentice completing a new Standard is work ready and the training is considered to have been successfully completed.  In future, this assessment will be undertaken by an organisation that is considered to be wholly independent to the company delivering the training and will need to be formally registered. An End Point Assessment can take a variety of forms, depending on the particular business sector and can include an examination; interview; observation; portfolio of work or any combination of these criteria. The result will be graded, as opposed to a simpler ‘pass’ or ‘fail’ under the Framework model. However, Standards will no longer necessarily include a Vocational Qualification.

 

Funding:


One of the biggest changes to the new Apprenticeship model will be around the funding of training delivery. Historically, the funding of Apprenticeship training has been managed by the Skills Funding Agency (SFA). Until recently, the SFA formed part of the Business Innovation and Skills (BIS) department of government but has more recently moved under the remit of The Department of Education.

Under previous rules, the SFA fully funded Apprenticeship Training for 16-18 year olds, with part funding for those aged 19 -24 years. This formula is set to change. In order to meet the growing number of Apprenticeship starts, the government will introduce a new Levy from April 2017. The Levy will apply to all businesses and be set at 0.5% of a company’s aggregate pay bill. There will be an annual allowance of £15,000 to ‘off-set’ against the Levy, meaning that companies with a wage bill of £3 million or less, will effectively escape payment. This is illustrated in the examples below:

 

 

EXAMPLE 1

 

Employer of 250 employees, each with a gross salary of £20,000

  • Paybill: 250 x £20,000 = £5,000,000
  • Levy sum: 0.5% x £5,000,000 = £25,000
  • Allowance: £25,000 - £15,000 = £10,000 annual levy payment

 

 

EXAMPLE 2

Employer of 100 employees, each with a gross salary of £30,000

  • Paybill: 100 x £30,000 = £3,000,000
  • Levy sum: 0.5% x £3,000,000 = £15,000
  • Allowance: £15,000 - £15,000 = £0 annual levy payment

 

 

The process:


In the future, Employers will:

  • Decide what Apprenticeship Training (if any), is needed;
  • Select a Training Provider of their choice;
  • Negotiate and agree a price for delivery of the required Apprenticeship training, including the End Point Assessment. This is a much more market orientated or commercial approach than currently, where the government offers a flat rate of funding per individual apprentice.

 

 

Digital Apprenticeship Service (DAS)


The government has developed a new digital platform, to collect payment of the Levy and allow distribution of the funds held in a levy account to pay Training Providers. Levy funds are only available for Apprenticeships and no other form of training. If not used within 24 months’ of entering into a company’s DAS account, the funds will be withdrawn by government. Employers will also use DAS to search for and select a Training Provider from an approved list.

 

WHEN will the changes come into effect?


The new system will came into effect in April 2017, with levy funds collected by HMRC from company PAYE accounts as of May 2017.

 

HOW will the changes impact upon my business?


The impact will largely vary depending on whether your company is set to become a levy payer or not.

 

Levy Payers


Levy Payers will face the most significant changes from the Apprenticeship reforms, in terms of needing to embed a new accounting (DAS) system and adjusting to paying a new compulsory payment towards apprenticeship training for staff, that if not used will effectively be a form of taxation.  The government will ‘top-up’ an Employer’s DAS account by 10% each month. Conventional wisdom suggests that Levy payers will therefore wish to use these funds to invest in Apprenticeship training but clearly, there will need to be some joined up thinking between HR, Finance and other company departments about how best to effectively use Levy sums.

 

For example, a company could decide to switch part of its recruitment from graduates to Higher Level Apprentices; decide to up-skill existing staff, via an apprenticeship; recruit new apprentices in specific and identified growth areas; or employ new apprentices in a more general area of business support, as a platform for future growth.

 

Non Levy Payers


Non Levy Payers will not be subject to collection of the Levy through the DAS system but can use DAS to search for and select a training provider to suit their general requirements. There are also differences in funding arrangements compared to the current system. From April 2017, once a Non-Levy paying Employer decides to recruit an apprentice and a price is agreed between Employer and Training Provider for delivery of the training, the government will co-invest or contribute toward the cost. The Employer will pay 10% and the Government pay 90% of the agreed training cost. However, the government’s contribution will be subject to a funding ‘cap’.

Each new Standard (and existing Framework until it converts to a Standard) will fit into a funding band. There will be 15 funding bands ranging from £1,500 to £27,000 and each band will represent the maximum that the government will co-invest for any given apprenticeship training. If a price agreed sits above the funding cap, then the Employer will have to make up any difference.

 

There are additional government incentives available, including a payment of £1,000 to an Employer who recruits a 16-18 year old apprentice.


For those Employers with less than 50 employees that recruit a 16-18 year old apprentice, the cost of training is free (100% paid for by government but subject to the cap arrangements)


An example of the pay mechanism for both Levy and Non-levy Employers is illustrated below (click on image to enlarge):


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HOW can JACE Training help me?


JACE Training is an established Training Provider that has been in operation since 1981. It has a dedicated and experienced team of Assessors and Trainers that are fully committed to bring out the best in all whom they come into contact with.

 

Our local network of training Centres provides coverage across London and the South East. As a direct employer of Apprentices ourselves, we are fully aware of the benefits of the Apprenticeship system and how best to ensure that each new recruit or training programme for an existing staff member, has the maximum benefit to your organisation.

 

The proposed changes are complex and radical. However, our staff are on hand to steer you through the reforms and provide honest and open advice that suits your organisational needs.

 

Our Vision is To Make a Difference. To find out how we can make a positive difference to your company, please call 020 8773 8146 or email AskUs@jace-training.co.uk and arrange an appointment for a free consultation. We can then review your training needs and help construct a plan for your business growth. 

 

 

 

Contact JACE Training

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Tel: 0345 241 7738

Email: AskUs@jace-training.co.uk

 

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