In his latest Autumn Statement The Chancellor added further impetus to their productivity agenda by committing to achieving three million apprenticeship starts by summer 2020. If achieved this will be a 35% increase compared to the previous five years. Aiming to also increase the quality of Apprenticeships in England, the Government is putting control of funding in the hands of employers.
How it works in outline
Core to this ambition is requiring employers with a wage bill of over £3million from both the private and public sectors to pay into a levy as a way of funding this programme. This levy will be payable regardless of whether the company has an apprenticeship programme or not. Companies with a wage bill of less than £3 million are exempt from the levy.
First levy payments are due in April 2017 and will be paid through PAYE. The rate will be set at 0.5% of the employer’s pay bill.
The money will be ring-fenced in the form of an electronic voucher that can be used to purchase training from recognised providers. Employers who pay the levy and are committed to apprenticeship training will be able to get more out than they pay in, through a top up to their digital accounts.
Establishing the value of apprenticeships
As an organisation dedicated to helping get people get on the job ladder KWES hope this new apprenticeship programme makes apprenticeships a viable alternative to university for those who either fail to get or choose not to pursue a university place.
By putting apprenticeships firmly in the hands of the employer the hope is that apprenticeships will be much more focused on providing the specific technical and practical skills that their workforce needs to boost productivity and provide competitive advantage.
Given budgetary constraints, it’s easy to understand the rationale for offloading the cost of apprenticeships onto employers, through the new apprenticeships levy. What the government has to guard against is that apprentices are not simply re-badged workers and that the impact of this levy does not manifest itself as a drag on wages.
Given the volume of apprentices sought, it begs the question as to whether this scheme can genuinely drive the sort of highly skilled worker numbers that ministers seek. At KWES we have 20 apprentices in training but we fall way below the £3million wage bill required to qualify. Under the scheme KWES may be able to provide Woodland Management training to companies that do qualify but beyond that it is hard to see how charities like ours could participate unless of course we all give ourselves a massive pay rise (not something we would consider doing!)
Overall KWES is cautiously optimistic about this apprenticeship programme and we hope that it will genuinely help young people as well as others such as ex-Service personnel and ex-offenders – the three catergories that KWES focuses on by helping them gain the skills needed to achieve secure, worthwhile, long-term jobs and not a rebadging on existing low skilled ones.
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