Preparing for the Apprenticeship Levy

Who am I? Dr. Gareth Thomas MIoD Strategic Planning and Policy Director, Babington Group Managing Director of Skills and Employment Support Limited Previously Head of Employment and Skills at the Learning and Skills Council, and Head of the Area Relationship Team Nottingham, Skills Funding Agency

Introduction to Babington Group Award winning national independent training provider, established in 1974, head office in Derby, but national delivery footprint. Currently employ circa 350 staff across England and supporting 7,000+ apprentices across circa 2,000 employers. Rated as Good by Ofsted in 2015, with Outstanding features in some sector areas. Underpinned by core business value of being employer-led, with sustainable growth through high quality and innovation

Who we work with:

Training: Career Pathways not just Qualifications Employment ready Learning and career pathway Unemployed 16-18 year olds Unemployed 19+ year olds Employed 16-18 year olds Employed 19+ year olds Commercial Learner Engagement and Support Team Study / Pre-Employment Programmes Traineeships Apprenticeships Corporate and professional training English & maths

Apprenticeship Levy Landscape The government is committed to significantly increase the quantity and quality of apprenticeships in England to reach 3 million starts in 2020: • New Institute for Apprenticeships led by employers to support quality apprenticeships • Employers at the heart of designing new Apprenticeships Standards through the Trailblazer programme • Apprenticeships will be given equal legal protection to degrees • Abolishing employer NICs for apprentices under the age of 25 from April 2016 • Apprenticeship targets for public sector bodies – consulting on new duty on public sector to have 2.3% of its workforce comprised of apprenticeships But a step change in the scale and quality of the apprenticeship programme also requires a step change in funding.

Update on the Apprenticeship Levy The Levy will be 0.5% of pay bill*, paid through PAYE All Employers theoretically in scope to pay the Levy An allowance of £15,000 available to all employers (to offset against their bill) Levy paid on pay bill in excess of £3m (2% of UK employers) Value visible available in digital account (Digital Apprenticeship Service) adjusted to reflect the proportion of employees living outside England Employers in England who pay the levy and are committed to apprenticeship training will be able to get out more than they pay into the levy, through a 10% top-up to their digital accounts Total amount of earnings subject to Class 1 Secondary National Insurance Contributions Earnings below the secondary threshold are not counted when calculating an employer’s NICs, however they will be included for the purposes of calculating the amount of levy the employer needs to pay

Update on the Apprenticeship Levy How is the Levy calculated and collected? Example Employer : 80% of Employees live in England, 20% of Employees live in Scotland and Wales • Employer of 250 employees, each with a gross salary of £20,000. • Pay bill: 250 x £20,000 = £5,000,000 • Levy sum: 0.5% x £5,000,000 = £25,000 • Allowance: £25,000 -£15,000 = £10,000 annual levy payment • Adjustment for % of workforce living in Scotland and Wales: £10,000 x 0.8 = £8000 • 10% Top up: £8800 available via digital account to invest in Apprenticeship Training and Assessment

Update on the Apprenticeship Levy What can the Levy funds be used to pay for? Apprenticeship Training and Assessment For current employees or new recruits Must be provided by a (Skills Funding Agency) Approved Provider or Assessment Body (From new Register of Apprenticeship Training Providers) Cannot be used to fund equipment, salaries or to back fill staff whilst training In the first year is likely to only be able to be used on a company’s own staff Can be used to fund activity for all levels of Apprenticeship Apprenticeships will include Frameworks and Standards, until existing Frameworks are replaced with new Apprenticeship Standards

Update on the Apprenticeship Levy How will employers access the funds in their digital account? Funds will sit in an account as part of the Digital Apprenticeship Service Employers must register for an account. This function of the Digital Apprenticeship Service should be available from January 2017 Select an Apprenticeship (Framework or Standard). This function is available now. Select a Training Provider and vote payment using digital vouchers. This function will be available for levy paying employers from May 2017 Public sector bodies will need to comply with Public Contracts Regulation 2015 when selecting a provider and an assessment organisation from the approved registers Funds not spent within 18 months will be made available to others

Update on the Apprenticeship Levy What additional Government funding will be available to pay for incentives or other costs? Additional funding will be made available from government to pay for English and mathematics training as part of an Apprenticeship Extra funding incentives expected to be made available to employers take on 16-18 yr olds To help meet extra costs, you will receive the same payment as you do when you recruit a 16 to 18 year old apprentice, if you recruit: - an Apprentice who is between 19 and 24 years old and who has an Education and Health and Care Plan provided by the local authority - a 19 to 24 year old who has been in the care of the local authority Providers will also receive funding from Government to help meet costs associated with training earners with additional needs

Update on the Apprenticeship Levy When will further information be available? In June July 2016 there will be information released from BIS. This is slightly delayed due to the referendum outcome, and is expected to include: Provisional funding bands, which will set the maximum amount of funding which is available to fund each apprenticeship from April 2017 The provisional level of the extra incentive 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

Update on the Apprenticeship Levy When will further information be available? In October 2016 we expect there to be further be information including: The final levels of funding and government support to employers for taking on 16 to 18 year olds The funding available to support English and maths payments for apprentices starting from April 2017 Full, draft funding rules Draft eligibility rules In December 2016 we expect there to be further be information including: Final detailed funding and eligibility rules Further employer guidance from HM Revenue and Customs (HMRC) on how to calculate and pay the apprenticeship levy

High Level Options for Your Approach Use a range of providers and coordinate the delivery, provision and quality assurance yourselves. Note: Public sector bodies will need to comply with Public Contracts Regulation 2015 when selecting a provider and an assessment organisation from the approved registers Choose a trusted and experienced partner, to provide advice and manage all of your apprenticeship provision including providing performance reports Develop in house delivery, however it comes with restrictions and risks. It could be a significant distraction from your core business, and will introduce additional inspection and audit risks.

How Babington can support you moving forward? A trusted and experienced partner, with a national footprint, bringing expertise in government funding, eligibility and policy. Can provide a flexible approach to meet your individual needs: Managing Agent Model for Multi-National sized Employers (Bespoke) Training and / or Assessment Services Pre-employment Training, Recruitment, Selection and Employment Services Centralised Customised Reporting Services Access to fully-funded / co-funded government grant funding for apprenticeship provision through until April 2017.

Questions? Gareth Thomas Strategic Planning and Policy Director E: Gareth.Thomas@Babington.co.uk T: 07810757264

Innovation and Influence Babington Group currently offer Leadership & Management commercially up to and including Level 8 through the CMI, whilst also able to offer a wider blended apprenticeship offer through BabingtonOnline our own bespoke VLE. Proven track record of supporting employers through a landscape of changing funding, qualifications and regulation. Significantly sized training provider, ability to influence and translate policy and priorities. Tangible relationships and influence through AELP (Patrons), BIS, IoD and CBI.