Friday, May 13, 2016

The Training Levy in England

I'm doing a bit of work in the English market at moment - but the Training Levy will impact across the UK - so I thought it was worth sharing this report on how policies are shaping around  how employers access their training accounts in England.

CBI  noticed in yesterday's Herald that it will have an impact on Scotland 
Report on Webinar hosted by FE On-line Nick Linford interviewing Keith Smith BIS on Operation of Levy

Keith has moved across from the Skills Funding Agency to BIS to mastermind this large scale transformation in the revenue raising and funding model for apprenticeships.

On 6th of April 2017 the new levy system will come into being and all UK employers with a pay bill of more than £3million PA will be required to pay a 0,5% levy. The collection will be through a monthly payment ( for organisations with seasonal employees there will be in-year adjustments) .  The system will be a standard one and will impact all employers across the public and private sectors that are on or above the £3 million pound threshold.

Yes, this includes Colleges, Local Authorities , Health Boards and any large public sector employer.

While I am aware that there will be a displacement effect - less public money going directly from the exchequer in to training. This is an interesting policy direction for the current UK government. In effect this is a tax on large employers to pay for training with a redistribution to the smaller employers,  who while making a contribution will benefit from access to this pot of money.  It should make employers more engaged in the standards and quality of training subsidised by the public purse and hopefully play a significant part in closing the productivity gap that exists across the UK.

The treasury expects to raise £3 billion pounds per annum through this levy and around £2.5 billion will be available for training in England.  The remainder will be available in Scotland , Wales and Northern Ireland ,  who will have their own mechanisms for disbursement. However , the changed collection model  is likely to have a  net  impact on the budgets of Wales , Scotland and Northern Ireland.

But there will be a series of additional publications between now and the end of the year to provide additional guidance and clarification.

What next?

June 2016
In June 2016 there will be information about:
• provisional funding bands, which will set the maximum amount of
funding which is available for each apprenticeship from April 2017
• the provisional level of the government support that will be available
towards the cost of apprenticeship training if you aren’t a levy paying
employer, from April 2017
• the provisional level of the extra payment you can get for hiring 16 to
18 year old apprentices, from April 2017
• the provisional amount that will be paid for English and maths
training for apprentices who need it, from April 2017
• eligibility rules that set who you are able to spend apprenticeship
funding on and where
• more information on who can provide apprenticeship training and how
you can set up your organisation to deliver apprenticeship training

October 2016
In October 2016 there will be information about:
• the final levels of funding, government support, 16 to 18 payments,
and English and maths payments for apprentices starting from April
2017 full
• draft funding and eligibility rules

December 2016
In December 2016 there will be information about:
• final detailed funding and eligibility rules
• further employer guidance from HM Revenue and Customs (HMRC) on
how to calculate and pay the apprenticeship levy 

Large and small employers will have access to a digital account and be able to commission training activity from this account . They will only be able to commission training from providers on an approved list.  ( this in England )

This  approved list  of training organisation will be known as the  register of apprenticeship training providers .  The aim of this new list is to make it simpler for employers to find and contract directly with training providers and to drive out unnecessary sub-contracts from the system. There will be new contractual terms and conditions for entry on to the approved list - these terms and conditions  will appear in June and the register will open this summer.

From January 2017 Employers will be able to open negotiations with the suppliers on the list in preparation for system coming into operation in April 2017

Between 850-950 providers support apprenticeship delivery at moment - it is likely that number may stay around the same but that more employers will become training providers and come on to the new list.  So there is an anticipation that some training providers will step back from apprenticeship delivery

Employers who come onto list will be inspected by Ofstead as will all providers delivering up to QCF Level 3

ROTO will remain in place for other training activities…

The model will still be one of co-investment for small non contributing employers they will make a contribution to their account and in return they will be able to access additional funds .  The current pilot model is that for every £1 a company invests in their training account they will be able to access £2 in return.  A cap will be in place for each framework  - the only additional payments that will remain in place are the £471 funding for both the English and Maths components.

The current pilot includes incentive payments for smaller employers , for taking on 16-18 year olds and there is a completion payment.  There is no commitment currently on incentive payments and there is still a broad discussion underway around the phasing of payments back to employers . The current system created a huge number of transactions and the hope is that a more simplified system can be put in place .  Details of this will appear in new Employer and Providers Guides that are scheduled for publication in June

From June a lot of work will start with employers so they understand how their training accounts will operate .

The Government in confident that system will be in place and be operational for April start. 

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