Welcome to this Lsect webinar Nearly 1,500 registrations for this webinar

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1 Apprenticeship levy reform update 3 December 2015 Visit feweekaac2016.co.uk to register Sir Michael Wilshaw HMCI a confirmed speaker Interested in delivering one of 36 workshops? Let us know here: com/r/aac2016 Visit Welcome to this Lsect webinar Nearly 1,500 registrations for this webinar Agenda 14:00 Registration 14:05 Apprenticeship levy reform update 14:50 Q&A 15:00 End For more events visit lsect.com 1

2 Apprenticeship levy consultation Sought views on: how to pay the levy how the levy should work for employers who operate across the whole of the UK how to make sure that employers paying the levy have the opportunity to get more out than they put in how best to give employers control of apprenticeships Did not seek views on: 23 questions Consultation closes at 2 October :45pm /consultations/apprenticeshipslevy-employer-ownedapprenticeships-training x how to much the levy should be x definition of larger employers Original apprenticeship levy proposal - Paid by all larger employers in all sectors - Paid as a PAYE percentage top-up - Paid whether or not involved in apprenticeships - Predicted that many larger employers wont use levy pot so those that do will get a capped top-up - No cash contribution beyond using levy pot - Levy pot will be time limited (use or lose) - Smaller employers wont have access to levy pot and will continue to have cash fee - Digital voucher system for all employer size - Payments planned to start from April Will require a new IT system to manage the levy pot and voucher application system For more events visit lsect.com 2

3 Government response to levy consultation (711 replied) Published last Wednesday on the same day as the Budget Budget document said: By , the levy will raise 3 billion in the UK. Spending on apprenticeships in England will be 2.5 billion, and Scotland, Wales and Northern Ireland will receive their fair share of the levy Colleges currently receive approximately a third of apprenticeship spending. Key providers, including colleges will be able to benefit from the significant increase in apprenticeship spending of almost 900 million by ceships-levy-employer-owned-apprenticeships-training Government response (part 1 of 9) In concluding the Spending Review process we are now in a position to confirm both the rate for the apprenticeship levy and its scope The rate for the levy will be set at 0.5% of an employer s pay bill and will be collected via PAYE. Employers will receive an allowance of 15,000. The effect of this allowance is that the levy will only be payable on pay bill in excess of 3,000,000 employers with a pay bill less than 3,000,000 will not pay anything So, for example: If employer has between 1 and 2,999,999 annual paybill they get given 15,000 allowance per year. So 15k in the levy pot If employer has 4,000,000 pay bill they get 15,000 allowance and then pay 0.5% of 1,000,000 levy = 5,000. So 20k in the levy pot Government will consult with employers (CBI?) on whether and how non-levy paying employers might be able to access more than 15,000 from the levy pot For more events visit lsect.com 3

4 Government response (part 2 of 9) Paybill will be calculated based on total employee earnings; it will not include other payments such as benefits in kind. It will apply to total employee earnings in respect of all employees. Employers who operate multiple payrolls will only be able to claim one allowance. Legislation to permit the imposition and collection of the apprenticeship levy will be introduced in the Finance Bill It is clear from the responses to this section of the consultation that employers want us to develop a solution which takes account of employers right across the UK. Ahead of the levy s implementation, we will continue to work with the Devolved Administrations to resolve the practical issues of implementation, funding flows and the interaction of the levy with devolved skills responsibilities to ensure the levy works for employers across the UK Government response (part 3 of 9) Responses to consultation had mixed view on the levy expiry period and what else it might be used for. We need to make sure that the expiry period selected enables the levy collection and payment system to take account of apprenticeships of different lengths... We have been clear that the levy will be used to support apprenticeship training for employers who are committed to training. We will use the time between now and the implementation of the levy to work closely with employers and training providers on the practicalities of how and when funds will flow through the system to best support employers training needs and apprenticeships of different lengths. Whole talent pipeline Interesting word, support. Might traineeships, pre-apprenticeships, up-skilling and re-skilling be eligible for tapping into the levy pot? For more events visit lsect.com 4

5 Government response (part 4 of 9) From the responses we have had on the issue of to what extent top ups should be limited, it is clear we need to make sure the system is fair and that we do not create barriers for employers who want to take on apprentices Employers in England who pay the levy and are committed to apprenticeship training will be able to get out more than they pay in to the levy, through a top up to their digital accounts Government response (part 5 of 9) Many see the registration of providers as a key tool for protecting the quality of apprenticeship training provision and maintaining the integrity of the apprenticeship brand. This is something that we will look at in the new system. We will manage the change in funding policy carefully so that the transition works for employers and also supports growth and innovation in the training provider network. The Digital Apprenticeship Service will provide employers with the means to pay for the off the job training of their apprentices drawing on government funds, including those raised by the levy. We are considering closely the best way to manage those funds, including how any ceilings may be set. For more events visit lsect.com 5

6 Government response (part 6 of 9) To ensure employers drive quality in the apprenticeship system we will establish the Institute for Apprenticeships, a new independent body, led by employers, to regulate the quality of apprenticeships within the context of achieving three million starts by Building on the current Trailblazer processes, the body will put in place transparent mechanisms for the approval of apprenticeship standards and assessment plans, and maintain clear quality criteria so that only standards that are valued by employers will be approved and funded the body will also support the work of BIS and DfE in setting a cap on the level of funding available for each apprenticeship standard established by April 2017 Operational functions associated with funding for apprenticeships and administration of the levy will be fulfilled by the Government s operational agencies. Ofsted and Ofqual will continue to fulfil their existing functions Government response (part 7 of 9) Employers have used this consultation to tell us very clearly that they value quality and this must continue to remain at the heart of our apprenticeship reforms. In particular they want employer oversight of the system so that it allows high quality apprenticeship growth. We will set out further information on the new employer-led Institute for Apprenticeships within the next few weeks. there are those employers who feel ready and able to take on the role of working with multiple providers to deliver training against an apprenticeship standard themselves. For those employers we want to think about moving towards an assurance model that works for employers who choose to work with lead providers and for those employers who want to take on key functions themselves. New assurance model for employer providers? For more events visit lsect.com 6

7 Government response (part 8 of 9) apprenticeships: We will set out further details on how we plan to go further in helping young people make the step from school to apprenticeships in the near future. We have also noted that many respondents felt that as well as practical support for apprentices and employers, there is a measure of additional financial support that is required for apprentices in this age group, compared to older apprentices, to cover some of the additional costs they face. We will continue to engage with employers on this point, in advance of setting out our apprenticeship funding policy. Government response (part 9 of 9) Traineeships are an important route into work and have a strong link to apprenticeships. Through our on-going dialogue with employers on the introduction of the apprenticeship levy we want to explore how using the levy could further strengthen this link, by possibly meeting some of the costs employers incur when supporting Traineeships All employers who do not pay the levy will be able to access government support for apprenticeships through the Digital Apprenticeship Service. We will provide further details on the support available in due course For more events visit lsect.com 7

8 So what do we think we now know? Levy is for all UK employers in all sectors with wage bill of 3m or more Levy is 0.5% of the wage bill above 3m (raising about 3bn per year) All employers will start with a levy pot of 15,000 Providers will need to be SFA registered & Ofsted & Ofqual still role Levy introduced April 2017 alongside new Institute for Apprenticeships who will approve/remove standards and advise on levy caps Funding agency (merged EFA & SFA?) continues to manage funds Digital Apprenticeship Service is the online system for posting vacancies, applying for vouchers and managing the levy pot Providers will no longer have allocations, and likely to be major changes to provider approval process The government acknowledge they still have a lot of key questions still to answer (see next slide) So what is government still deciding? Will non-levy payers have access to other employers levy pot? How will top-up work and how will it be limited? What s the expiry duration after money goes into an employer levy pot? Can the levy pot be used for non-apprenticeship delivery? Can the levy pot be used for frameworks if they aren t switched off by 2017 How will 16-18s get extra support, and how will English and maths be funded? How will Scottish and Welsh employers get their levy money back? For more events visit lsect.com 8

9 Q&A Visit feweekaac2016.co.uk to register Sir Michael Wilshaw a confirmed speaker Interested in delivering one of 36 workshops? Let us know here: com/r/aac2016 Visit For more events visit lsect.com 9