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How to make the apprenticeship levy pay
Collaboration is key

It’s been a couple of months since the apprenticeship levy came in. It’s now time for care providers, learners and training companies to collaborate to ensure everyone sees the benefit of this new approach. Siva Singh explains why.

The apprenticeship levy is here and has been since April. Whether your care business is primed to load up on fresh talent, or you wouldn’t know what to do with an apprentice if you were given one, this important change is affecting everybody.

While change is inevitable, the subject of whether businesses will benefit from the overhaul isn’t so clear. Care providers across the country are asking whether the apprenticeship levy can really work for them, or just end up costing them money.

As with many things in life, the answer may lie in a bit of old fashioned teamwork.

The apprenticeship levy

For those still unfamiliar with the changes, let’s go back to the beginning. The apprenticeship levy is part of the Government’s plan to create 3 million new apprentices by 2020. From April 2017, UK employers with an annual pay bill over £3m have been required to invest 0.5% of their total payroll every month – minus a £15,000 allowance – in apprenticeship recruits.

Only 2% of UK businesses will fall into this category. If you’re one of them, you’ll be expected to declare your levy dues to HMRC, who will set up PAYE payments into a separate training account. You’ll also get a 10% bonus on anything you pay in. From there, you’ll be able to buy training and assessments through an approved apprenticeship provider; who will help you find and employ the types of apprentices you want, as well as agree contracts and pricing. It’s worth noting that wages, travel costs and other work-related expenses can’t come out of your training account.

For the 98% of businesses who won’t have a pay bill big enough to qualify for the levy, you’ll be able to hire and train apprentices in the same way, but for just 10% of the cost – with the other 90% coming from the Government.

If you’re a small business employing fewer than fifty people, you won’t have to pay anything for an apprentice; the Government will fund the training and assessment costs in full.

Trailblazing standards together

The care industry is a major player in the apprenticeships market. However, in recent years, there have been growing concerns that many modern apprenticeships are failing to offer businesses the value they once did, due to outdated training frameworks and skills shortfalls.

In 2012, a review of apprenticeships in England was carried out by the Secretary of State for Education and the Department for Business, Innovation and Skills. After reviewing the standards of training, qualifications and skills that employers and learners needed, a significant number of employers felt that existing Specification of Apprenticeship Standards for England (SASE) frameworks were not fit for industry needs. Businesses wanted something new: a reform of the old SASE frameworks to meet the current demands of employers, learners and training providers. The Government responded, with Trailblazers.

Trailblazers are groups of employers working together to design brand new, role-specific apprenticeships across all industries. These high-quality standards are being developed to make training more flexible, focused and effective. It’s happening throughout the country; 600 to 800 new apprenticeship standards are expected to be created though trailblazer groups, compared to the 250 standards under the old SASE frameworks.

Signed-off by Ofsted, the new trailblazer standards offer tailormade apprenticeships that align with a specific job role. They will all last a minimum of one year, include maths and English skills, as well as a compulsory end-point assessment.

We’re already seeing these new standards and frameworks being set up in the care industry. For example, two standards have recently been developed by a trailblazer group for adult care employers: Adult Care Worker (Level 2), and Lead Adult Care Worker (Level 3).

The development of these standards happened through multi-channel collaboration between eleven different employers, as well as several awarding organisations and learning providers. Through this major collaborative partnership, new standards were created to replace the current apprenticeship frameworks, and strengthen the generic competencies of care workers across all sectors of adult social care.

Closer working with training providers

As well as improving standards, the apprenticeship levy is also set to shake-up the working dynamic between employers and training providers.

With the creation of training accounts, ‘buyer power’ is effectively put back into the hands of businesses, who are now free to wave their ring-fenced cash under the noses of a whole industry of competing training providers. Apprenticeship providers are faced with little choice but to tailor their offering – with the best deals and service – to meet the needs of their customers and attract new business. Added value and supporting services will become the norm. For example, incorporating additional e-learning packages into apprenticeships, which can then be shared with partners at no extra charge – not only saving customers money but enriching the learning of apprentices.

Improved products are obviously going to be welcomed. However, what most businesses want to know is whether the levy will pay off in financial terms. Clearly, the size of your organisation will matter. Realistically, a large business making payments will struggle to make short-term gains. As an example, a company with 500 employees paying an average salary of £25,000 will pay £47,500 in levy payments (with £52,250 to spend after the 10% bonus). A lower-end training bill of £3,000 would mean needing to train 17 apprentices to avoid losing the balance. As you can see, on the surface these kinds of figures are unlikely to work for many businesses of that size.

Of course, the levy isn’t about putting money into businesses’ pockets; it’s about creating a relevant and well-trained workforce to boost our crawling economy. What apprenticeship providers will aim to do is work with employers to build the levy and new standards into long-term training strategies that look towards continued development and profitable business growth. Businesses will be helped to think about how to reverse-engineer their training strategies around the new frameworks, which range from NVQ 2 right up to degree-level.

How we see it

As we see it, employers will have the opportunity to benefit from the changes if they go about things in the right way.

If employers fail to react, or – as some are suggesting – simply choose to write off the payments as an expense, the apprenticeship levy will become just another form of ‘business tax’.

Essentially, employers will need to work with training providers to position apprenticeship training as an investment in building a strong, talented, ambitious and loyal workforce to meet its long-term business goals, not just as a simple training allowance to fill employment gaps today.

If done well, benefits of the levy seem clear: shaping new and improved apprenticeship standards; giving employers greater control over their training; placing employers into a collaborative partnership with training providers; putting employers in control of their training budget; and positioning employers as the customer – improving the service they receive while encouraging competition between training providers to offer the best apprenticeship packages.

Through collaboration with training providers, competitors, customers and suppliers, a real opportunity is being given to push standards of training. The result, as many agree, will be improved frameworks, increased productivity and the development of a range of new services – both for the Government’s 2020 target, and long into the future.

Siva Singh is a Director of Escalla Care Ltd. Email: Siva.Singh@escalla.co.uk Twitter: @escallacare360

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