The Apprenticeship Levy is here – is your school affected?

By: Andrew Gladstone-Heighton

Policy Leader

Wednesday 19 April 2017

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As we move into the new era of the Apprenticeship Levy, what does this mean for the public sector and those schools affected? With budgets already stretched to breaking point, is there even capacity to make the most of this additional taxation?

So, we’re now living in the brave new world of the Apprenticeship Levy. All employers whose wage bill is over £3 million will have to pay a 0.5% tax, which can then be drawn down to pay for an apprentice or apprentices. This isn’t just for private companies either – in order to drive adoption of apprenticeships (and support the government’s target of 3 million apprenticeship starts by 2020), public sector organisations, including schools, will also have to pay this levy.

In isolation, this would only be an issue of additional taxation for an already over-stretched sector, but in addition the government has set a target for most public sector bodies with over 250 employees to hire 2.3% of their workforce as apprentices, every year.

This measure has been brought in as ‘public sector will play a key role in meeting [the 3 million] target… [the] government intends for the public sector to act as a model employer regarding apprenticeships and for apprentices to be considered regularly in public sector workforce planning’. This is all fine and noble; however, my problem with such a blunt statutory instrument is that it does not take into account the structure and nature of the workforce in the public sector, especially in schools.

Larger schools, multi-academy trusts and maintained schools will bear the brunt of this, having to deploy apprentices in their staffing structure. The lack of specific apprenticeship standards relating to the sector leads me to believe that the Department for Education will push for the creation of more graduate apprenticeships in teaching to support this target.

I assume that the lack of punitive measures, beyond the government working with the public sector organisation in breach of the measure to identify further opportunities for apprenticeships, shows that the government is keen to avoid major embarrassment on this target not being met. For what it’s worth, I believe the newly established Institute for Apprenticeships is going to have far too much on its plate for this to be a major concern in the medium term, too.

The kicker of all this is that it comes at a time of a steep decline in the amount of money going into schools, in addition to increases to national insurance and pension contributions. I feel that of the public sector organisations affected by the target, local authorities and schools are going to be hit the hardest.

So, how to respond to all this? Firstly, I’d identify if your organisation is a levy payer (which if you’re a multi-academy trust, or a maintained school through a local authority, is almost inevitable), and then identify where this levy is being collected (for example, at trust or authority level). There are a range of online tools that can help you plan how to spend your levy, and how many apprentices it can buy for you. The government’s intention is that you then build this into your workforce planning as you look to the future.

Whether the public sector has the capacity to take on apprentices across the board is something that will only become clear over the next few years. We can expect this target to be changed if the right behaviour is not being displayed.

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