Revealed: apprenticeship levy operating model

Revealed: apprenticeship levy operating model

> CBI pleased government now engaging with employers but say guidance ‘still raises more questions than it answers’
> System won’t be fully operational until 2020, with delay described by sector leaders as ‘pragmatic’ and ‘reducing risk’
> Mandatory cash fees for over 98 per cent of employers to proceed, leaving sector leaders fearful ‘we will lose them’

The government today kept its promise to publish more details of the apprenticeship levy operating model — but sector leaders warned it raised “more questions than it answers”.

The online document was criticised for lacking detail by the Confederation of British Industry (CBI) and Association of Colleges (AoC).

The guidance published on April 21, which had been promised in last month’s budget, also revealed the levy system due for introduction in April 2017 would not be fully operational until 2020.

And a confirmation that 98 per cent of employers would pay mandatory cash fees, caused Association of Employment and Learning Providers chief executive Mark Dawe to warn the government needed “to think very carefully” about its impact on smaller employers.

He said: “If the financial contribution they have to make is too high and the payment system is too complex, we will lose them.”

Neil Carberry, CBI director for Employment and Skills, thought the guidance showed the government was “now engaging with employers”.

But he said: “We think it still raises more questions than it answers.”
AoC chief executive Martin Doel agreed, telling FE Week there was “still much that needs to be clarified”.

The operating model also warned that the Digital Apprenticeship System would not be fully operational for all small employers until 2020.

Mr Doel said phased introduction for smaller employers “seems pragmatic”, considering “the obvious risks associated with introducing complex IT systems that will underwrite the digital apprenticeship service.”

Mr Dawe responded: “If delay means that the system will work, we would rather have that.

But there is no doubt that providers with both levy paying and non-levy paying employers will be managing potentially very complex arrangements for the next two or three years and the road to delivering 3 million apprenticeships will not be a straightforward one.”

And David Hughes, who used to be responsible for funding and contracting of all apprenticeship programmes at the Skills Funding Agency and now leads the Learning and Work Institute, agreed.

He told FE Week: “It’s good the government has realised it needs to phase implementation. The current system will be thrown out and current employers will be disaffected by all of this. So in some ways it’s a good realisation of potential risk.”

But Shadow Skills Minister Gordon Marsden warned “even a three year phased launch sounds ambitious to say the least”.

The levy, first announced by the government in July, is set at 0.5 per cent of an employer’s paybill.

As outlined in the new guidance, all employers will receive a £15,000 allowance to offset against the levy. This means only businesses with a paybill of more than £3m will pay.

The money raised will be ring-fenced, so it can only be spent on training apprentices and all levy-paying companies will receive a 10 per cent top up on monthly levy contributions.

The new guidance promised further information in June, for example on the provisional level of government support for non-levy payers’ training costs.

It added “full, draft funding and eligibility rules” would be published in October, with “final detailed funding and eligibility rules” and guidance on “how to calculate and pay” the levy due in December.

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Editorial: Pushing for a pilot

The latest apprenticeship levy operational guidance is almost totally geared at explaining how it will work for the employers forced to pay it.

This is welcome, although 5,000 words on a single government web page seems a little rushed and half-hearted.

But colleges and independent training providers remain largely in the dark about how it will affect their funding from April next year.

There is promise of ‘provisional’ detail next month, but this is a poor state of affairs when you consider the change kicks in for all new apprenticeship starts four months before the end of the 2016/17 academic year.

Despite the admission there will be a phased implementation it strikes me that everyone, civil servants included, will wonder whether switching to the levy from April 2017 is over ambitious.

Few large scale government IT projects involving multiple departments start with a national roll-out, for good reason.

So let’s hope there is a plan B, which (whisper it) might even include the not so radical idea of undertaking a pilot…

Nick Linford