A Guide to the Apprenticeship Levy for Finance Directors and Managers

Transcription

1 A Guide to the Apprenticeship Levy for Finance Directors and Managers Use it or lose it? What Financial Directors and Managers need to know about the Apprenticeship Levy. Learn more at pearsontq.com

2 Cover image by Pressfoto - Freepik

3 Contents 01 Are you paying twice for training? 02 The Levy at a glance 03 Commercial benefits of Levy funded Apprenticeships 04 How will you provide training? 05 How Pearson TQ can help 06 Next steps Image by katemangostar - Freepik

4 Image by Freepik Are you paying twice for training? You could be paying twice for essential training if your organisation: has an annual wage bill of 3m+ and pays for management training Do you have an annual wage bill of 3m+? Are you already paying to train your managers? In this quick guide, we help financial decision makers get a handle on how much they could already be spending and how much they stand to gain by taking full advantage of the Apprenticeship Levy. The Levy at a glance The Apprenticeship Levy came into effect in April Companies that pay more than 3m in wages must contribute 0.5% of their payroll into a fund, to which the Government adds 10%. When your Levy fund runs out, your organisation switches to a co-finance model. The co-finance principle is based on your organisation paying 10% towards the cost of apprenticeship training, the government will pay the rest (90%) up to the funding band maximum. The Levy can only be spent on accredited training programmes. As of May 2017, funds that you don t use for delivery of apprenticeships will expire 18 months after they enter your Levy account.

5 Use it or lose it? If your wage bill is over 3m the Levy is not optional. But whether you make the most of it is up to you. As of May 2017, funds that you don t use will expire 18 months after they enter your account. If one of your organisation s financial goals is to reduce costs in training delivery, you could already be paying twice for training. Or missing out on a cost effective opportunity to upskill your staff. So remember, you ve got 18 months to use your Levy contributions to their full potential. Illustration by Ben Wiseman

6 Commercial benefits of Apprenticeship Levy funded Management Apprenticeships Immediate savings > Save on graduate recruitment Employers invest at least 82 million on graduate recruitment, according to the AGR 2016 Annual Survey. If your business is already recruiting numerous graduates onto a graduate training programme, Levy funded apprenticeships offer a cost effective alternative to standard programmes. The average cost per hire for a graduate, excluding law firms, is 3,383. (Source: AGR Development Survey 2017) > Unlock significant funding When your Levy fund runs out your organisation switches to a co-finance model. The co-finance principle, is based on your organisation paying 10% towards training and the government will pay the rest (90%). This means investing 10m could bring your organisation 90m of additional funding. > Stop paying twice for training When you ve paid a premium for graduates, you still have to train them. If you re already spending a considerable amount on management training for new starters and/or existing staff whether in-house or outsourcing it makes sense to switch to apprenticeships and use the Levy to pay for them. 55% of graduate employers currently recruit apprentices. (Source: AGR Development Survey 2017) > Recoup your tax You can either write off the Levy or put it to work. According to a recent report by the CIPD, a fifth of Levy paying employers are swallowing the cost. It s hardly tax efficient. Organisations have the ability to transfer 10% of their Levy to any organisation, why not upskill your supply chain.

7 Long-term gains > Increase revenue For FDs with foresight, this is one of the main reasons to become an Apprenticeship Levy advocate. Enhanced skills mean higher productivity, better service and a bigger contribution to your bottom line. Apprenticeships provide a typical return of for every 1 of government investment in apprenticeships at Levels 2 and 3. (Source: Department for Education) > Become more competitive Good training and development sets businesses apart in a tough market place enabling you to attract and retain the best talent giving you the competitive edge. And ultimately increase revenue. 70% of employers say that apprenticeships have improved product quality and service. (Source: Department for Education) > Save by training existing staff With Management Apprenticeships you can choose to reward employees who have proven themselves to you and thereby grow your own talent. You can focus on divisions or business segments most in need of leaders selecting employees who already know their main area of responsibility. Employers spend a median of 3,015 to develop each graduate. (Source: AGR Development Survey 2017) > Boost retention Apprenticeships enable learners to pursue professional development and gain valuable practical experience while earning money and avoiding student debt. They also reduce your dependence on hard to retain graduates. All this helps to create a more loyal workforce and reduce productivity-draining, costsapping staff turnover reducing recruitment agency fees, re-hiring costs, and advertising expenditure. Employers spend around 1,722 on attracting each graduate, including recruiters fees and wider marketing. (Source: AGR Development Survey 2017) 20% of graduates leave by the first year after completing a graduate development programme, increasing to 46% after five years of employment. (Source: AGR Development Survey 2017) 20 % 83% of apprentices say apprenticeships have improved their career prospects. (Source: Department for Education) > Only invest in the skills you need Why allocate budget to skills your business doesn t require? Management Apprenticeships are designed by employers, for employers. That means they prepare your workforce for the real demands of work and enable you to mould the managers you need. Image by Angela Ithyle Image by Pressfoto - Freepik

8 Be wary of re-badging According to the CIPD, 46% of levy paying employers are tempted to re-badge their current training activities to meet the regulations. Just bear in mind that training must meet the approved apprenticeship standards in order to qualify. Let s look at the numbers. How much could you save? This example scenario is based on a organisation that pays a Levy contribution and is investing in a L3 BTEC Team Leader and Supervisor programme, which has a funding band maximum of 5k per learner. They have 300 managers with an total annual wage bill of 12m. Their Levy contribution is 45k pa (0.5% of wage bill minus 15k allowance). They currently pay 1.5m for management training ( 5k per head). If they don t use the Levy 1.545m TOTAL OUTLAY They still pay 45k Levy contribution. They still pay 1.5m for management training. Their total outlay is 1,545,000. By using the Levy they save 1,354,950 If they DO use the Levy 190,050 TOTAL OUTLAY They pay the Levy contribution of 45k and the government adds an additional 4,500 (10%) into their training pot. Their Levy pot is now 49,500 and they need an extra 1,450,500 to fund their 1.5m management training. Using co-finance they pay 145,050 (10%) and the government pays 1,305,450 (90%) towards their management training. Their total outlay is 190,050. Co-Finance Remember, once your levy fund runs out, your organisation switches to the co-finance model. This means you pay 10% of the training costs and the government will pay the remaining 90% (up to the funding band maximum). Illustration by Tang Yau Hoong

9 How will you provide training? Working with HR and L&D Naturally for any training programme to succeed it must be championed by those who will oversee its delivery. Is training managed by HR, Learning & Development and/or a dedicated apprenticeship resource within your organisation? Check to see what they re doing with the Levy and ensure they have all the essential information. And the right partner where required... Choosing a training provider Some employers choose to become registered employer providers in their own right, although most will seek an external training provider who is on the Register of Apprenticeship Training Providers (RoATP). Pearson TQ is a registered employer provider, but we also support organisations who are employer providers to deliver their apprenticeship programmes. So, even if you are registered as an employer provider, Pearson TQ can still work with you. Choosing an experienced and approved apprenticeship provider, such as Pearson TQ, can guide you through the process and develop a training programme that is tailored to meet your organisation's needs. Pearson TQ can... Help navigate the apprenticeship reforms The Levy is a new concept to organisations, therefore even businesses who have experience delivering dedicated training and apprenticeship programmes are navigating their way through the apprenticeship reforms. At Pearson, we fully understand the regulations, we are a Levy payer ourselves and we will utilise our experience to help you maximise the return on your Levy. Deliver high level training The UK is languishing behind Europe in higher level qualifications. In a global economy with Brexit fast approaching, it s vital that we upskill to remain competitive. Pearson TQ focuses on management and leadership apprenticeships, ranging from level 3 to level 7, equipping business managers and leaders with the essential skills to succeed in their roles and grow their business. Provide an end-to-end service Pearson TQ provides a fully managed apprenticeship service. We can support you at every stage of the process, from developing and delivering training programmes to End Point Assessment (EPA). Government legislation states that EPA must be delivered by a separate body to the employer and training provider. Pearson TQ is experienced with working with a number of EPA providers and can work with any that you choose, but within Pearson we also have our own EPA organisation, which is approved to assess specific standards by the Skills Funding Agency and completely separate to our training division. Image by Pressfoto - Freepik

10 Ready to take full advantage of the Apprenticeship Levy? Pearson TQ works closely with employers to maximise their investment, enrich existing management talent and shape future leaders. Our managed apprenticeship service is tailored to the specific needs and corporate strategy of each business. We re able to provide a blended learning approach, designed to suit both the learner and the commercial environment. Get in touch with us to today to find out how your organisation can make the most of the Apprenticeship Levy and let your HR, Learning & Development and apprenticeship training teams know we re on hand to help them through the process. For more info, visit Navigating the new talent management era A roadmap to the opportunities and pitfalls of Apprenticeship Levy funding How to take full advantage of the Apprenticeship Levy - maximise your investment, enrich existing talent and shape new employees from day one. Download our full guide to the Apprenticeship Levy by scanning the QR code or visit resources.pearsontq.com/apprenticeship-toolkit/ Learn more at pearsontq.com

11

12 For further information and support or to find out more about apprenticeships, please feel free to contact us on Learn more at