18th April 2018
The Apprenticeship Levy: Time limits on funding
Educational institutions that fall under the scope of the Apprenticeship Levy have been paying their contributions for a year now, although it seems that many are still deciding on how and when they’ll use their contributions.
In this guide, we’ll highlight why time might not be on the side of organisations in this situation and explore some of the time issues when it comes to tackling the Levy.
Some employers who are contributing to the Levy, still don’t have a set plan in place. Given the last-minute nature of many clarifications, changes to the Levy and associated apprenticeship reforms, it’s highly understandable that many organisations are still getting to grips with exactly how they’ll recoup money they're paying in via training.
However, with the government looking to achieve three million apprenticeship starts by 2020, the take up of apprenticeships can seem slightly disheartening.
The sunsetting process
Under the ‘sunsetting’ process, employers have 24 months in which to spend their Levy funds before they leave their Apprenticeship Service account (ASA) and then transferred into the general apprenticeship funding pot.
It’s important to note this ticking clock began when your first set of contributions arrived in your ASA so now there is only 12 months left.
It’s necessary to factor in the 24-month time limit as part of a pipeline. You’ll pay into the Levy monthly, on a ‘pay-as-you-go’ basis and funds will be removed from your account 24 months after each payment is made.
Moving the goalposts
Given the slow take-up in getting on board with the Apprenticeship Levy, it’s well worth considering whether the government could seek to further dis-incentivise non-participation by lowering the time limit on using funds.
In its initial proposals, a fund expiry time limit of 18 months was specified before eventually being pushed back in the finalised legislation.
“We received feedback from employers and representative groups that a longer expiry period would help employers prepare for the new system and adapt and scale their training programmes. Employers also highlighted that many new high quality standards on which they would like to train apprentices are still being developed. Employers suggested that 24 months would be more consistent with an annual planning cycle,” said Education Secretary Justine Greening.
However, the fact that so few employers are using their funds for recruiting apprentices or upskilling staff, it sets a worrying trend that the government may seek to redress if take-up isn’t improved.
On the plus side, there are new standards being approved every day and even if you’re still waiting on the roll-out of industry or role-specific apprenticeships, there’s plenty of general standards available that’ll fit most educational institutions.
Pay as you go
Many employers we’ve spoken to have been understandably keen to recoup their Levy spend with the least hassle possible. To this end, they envision using their funds by splashing out on a single (or handful of) higher-value standards.
However, many are shocked to learn that - as with most things Levy-related - training is also paid for on a piecemeal basis.
To use a very simple example, let's say you're an employer that's paying £9,000 a month into the Levy. You're looking to use your funds on the popular operational/departmental standard, which costs £9,000 and takes two years to complete.
If you work on the assumption that you'll need to pay 20 per cent of that to cover end point assessment - that means you'd be paying £300 per month for 24 months.
So if you waited until month 24 to begin and wanted to spend that £9,000 sitting in your account before it disappeared - you'd have to start 30 people on the standard in that month or risk losing most of that to sunsetting.
Over to you
Time flies and 2019 is just round the corner, so if you’ve got any questions on using your Levy funds - don’t wait. Reach out to us via Twitter or LinkedIn.
We can manage, implement and provide hands-on support for practically every element of the Apprenticeship Levy, working with you and your local authority or trust.
Talk to our team to find out more: