In a bid to dramatically increase the number of businesses offering apprenticeships, the UK government introduced the apprenticeship levy in April 2017. This guide explains what it is and how it affects you.
What is a levy?
A levy is a tax that is imposed on an individual or business.
From now on, any employer with an annual pay bill (total amount of money paid to employees each year) of over £3 million must pay an apprenticeship levy to the government.
The apprenticeship levy is charged at a rate of 0.5% of their annual pay bill, minus an annual ‘levy allowance’ of £15,000.
How does it work?
The levy paid by businesses is put into a fund, which they are allowed to claim back if they spend the money on training apprentices. They can also choose to share up to 25% of their fund with other businesses in their supply chain, who might also want to train apprentices.
If the fund isn’t claimed after 24 months, HMRC (the department of the UK government responsible for collecting taxes) can reclaim the money. They put this money towards helping smaller businesses train apprentices.
Smaller ‘non-levy’ businesses who offer apprenticeships to 16 to 18 year olds will receive 100% of the training cost from the Government (and 90% for apprentices aged 19 and over). Non-levy businesses with less than 50 employees will also receive a £1,000 incentive for taking on an apprentice aged 16-18.
This essentially means that both large and small businesses have a strong incentive to take on apprentices.
How does this affect me?
This is both good and bad news for anyone considering an apprenticeship.
On the one hand, the number of apprenticeships available to you, especially if you’re aged 16-18, has increased. According to the latest government figures, since the levy was introduced in April 2017, it has directly supported 312,900 people to start their apprenticeship journey.
On the other hand, there have been concerns that these new incentives are causing some employers to ‘cash in’ on the scheme whilst providing poor training.
More than 2,500 organisations registered as training providers following the levy’s introduction - many of them spending their funds on in-house ‘training’ services, despite having no previous experience with education training. Even established training providers, such as Learndirect, have had their government funding pulled due to ‘inadequate’ training. For more information on this, take a look at the Useful resources at the end of this guide.
What can I do to make sure I receive good training?
When searching for apprenticeships using Unifrog’s Apprenticeships tool, you can rank and filter programmes by the percentage of students or employers who recommend the relevant training provider. This information is based on annual data released by the UK’s Department for Business Innovation and Skills.
Once you’ve made your shortlist of apprenticeships, you’ll see the training provider’s Ofsted rating next to each selected programme. Ofsted is the government body responsible for assessing the quality of educational institutions, including apprenticeship providers. There are four levels in total: Inadequate, Satisfactory, Good and Outstanding.
From your Unifrog shortlist, you can follow the link to each apprenticeship’s full Ofsted report, so you can read details of the training quality before applying.
We’ve put together this handy checklist to help you find apprenticeships with high-quality training:
- Look for recommended training providers. When using Unifrog’s Apprenticeships tool, try ranking your longlist of programmes by ‘% student recommend’ or ‘% employers recommend’. To be clear - the recommendation is regarding the training provider, not the employer.
- Check the Ofsted report. You’ll find the report for each training provider in your shortlist when using Unifrog’s Apprenticeships tool. Aim for training providers that are classified as ‘Good’ or ‘Outstanding’
- Search for the employer on Glassdoor. You’ll find many of the reviews will be written by more senior employees rather than apprentices, but it will help you get an overall feel for the company
- Talk to your potential employer. Ask them questions about the number of hours of training you’ll receive, and the percentage of their apprentices that go on to secure full-time employment or further training.
- Check the qualification you’ll receive is useful for your career. Make sure the apprenticeship you’re applying for will award you recognised qualifications that you actually need in order to progress your career. It’s very possible, for example, to leave college and gain full-time employment as a business administration assistant (and a salary to match), without first completing an apprenticeship in business administration.
- This BBC article goes into detail about the training providers whose funds have been withdrawn.