Government funding rules for the apprenticeship levy changed for small business benefit.

In May 2017 the government brought in a new scheme called the Apprenticeship Levy. Now you may already be very familiar with this scheme or it may be a completely new term to you. Recently, when explaining this to a client, they said “well actually for something that the government has done, that is pretty good”.

Initially the levy only directly affected big businesses with a payroll of over £3m/year.

But on the 26th of June this changed.

What is the Apprenticeship Levy?

The apprenticeship levy is basically a tax on the pay roll of big businesses. It’s a tax that the company can utilise for their own benefit. This tax is money that the company is encouraged to use for apprenticeship training and nothing else. If this tax is not used on apprenticeship training and assessment within 24 months of being collected then they lose this money. This means that big businesses have a financial investment in looking at how apprenticeships can develop their talent: at every level from new entrants to senior managers.

How does this affect me?

Now most businesses don’t have a payroll of over £3 million so how can this affect you? Well on June 26th 2018 the government website reported that employers are allowed to transfer 10% of their funds to multiple business. See full article here

This has always been the case but on the 26th they can now look at giving this to multiple businesses whereas before it was only to one business. There are reasons that this has happened. The first is a lot of huge companies just cannot use all their levy. It would be impossible and therefore this money will be lost and that’s not the idea of the scheme.

The other reason is because even though the companies affected by the levy makes up only 2% of businesses they account for 40% of high quality apprenticeships. The government really sees the value of apprenticeships to young people, current staff and to the economy. Therefore, they want business to take advantage of this in any way possible.

Apprenticeships and Skills Minister Anne Milton said:

“It’s fantastic to see so many businesses taking advantage of the opportunity that the apprentice levy provides. As well as kick starting their apprenticeship programmes, business is now recognising the benefits an apprentice brings to the work place with enthusiasm and new ideas.

We want to keep improving apprenticeships for everyone and I am delighted that we are now extending the flexibility of the apprenticeship levy. If we look at what the Berkeley Group and Norfolk County Council are doing, this is business and the public sector using the apprenticeship programme to change people’s lives.”

So how can a business like yours utilise this? Approach the HR manager of large companies in your supply chain. You may get funded by a Local Authority. Local Authorities will struggle to use all their levy and therefore could allocate it to organisations they fund. You may work in partnership with or be a supplier to a large company who you think may struggle to use all their apprenticeship levy.

So can you think of a large business which you have a great relationship with, see if you can speak to them about accessing their levy. There really is no reason for them to say no, they have a pot, if they are not using it they will lose it. I’m pretty sure most business would rather support their suppliers that help their company rather than the government.

Remember this may not be about hiring someone new it could be about upskilling your current staff. With degree apprenticeship programmes available it could be a wonderful opportunity to develop your current workforce.

As a little tip you will need to speak to HR and we’re happy to help broker the conversation for you.

If you are interested to find out more about apprenticeships then please go here