The future of apprenticeships

April 2017 sees major changes coming into play for apprenticeships in England.

Some of the previous winners of the hit BBC show The Apprentice may not have attained dazzling heights of success, but the value of apprentices for businesses should not be underestimated. As apprentices learn their craft on the job, they understand how your business works, can be moulded to fit your unique style of working and become a great investment.

To make sure your organisation makes the most of apprenticeships, we have created a simple Q&A about the nature of the upcoming reforms.

What is happening to apprenticeship frameworks?

Apprenticeship frameworks are being phased out and new approved standards will be coming into force. The standards have been developed by trailblazers, who are groups of employers who have collaborated together to establish new apprenticeship standards for occupations within their sectors.

What are the approved standards?

The approved standards are short documents which set out the job role that an apprentice will be undertaking and the skills required of them. The idea is that once the apprentice has finished their apprenticeship, which should last at least one year, they will be able to know, understand and competently perform in the job.

What sectors does this involve?

So far, 260 standards have been published and more than 180 new standards are currently in the process of being developed. These standards cover a broad range of sectors, including childcare and education, social care, engineering and manufacturing, hair and beauty, catering and hospitality, sales, transport and finance and accounting.

What will be the costs for employers?

Employers with annual pay bills of more than £3 million will have to pay an apprenticeship levy. However, the government is also introducing a levy allowance of £15,000 per year to offset an employer’s costs. This means that the total sum these employers will be required to spend is 0.5% of their pay bill, minus the £15,000 allowance. The levy is being implemented in April, but payments will commence in May 2017.

For those employers who don’t pay the levy, the costs of apprenticeships will be split between them and the government. The employer will pay 10% of the cost and the government will pay 90%. They will need to negotiate and agree their apprenticeship programme with the training provider of their choosing.

Employers with fewer than 50 employees who hire apprentices aged between 16 and 18 will have their training and assessment costs paid by the government.

In cases where an employer hires a 16-18 year old or 19-24 year olds who were in care or who have an education and health care plan, the government will give the employer £1000.

Under this system, can employers spend as much as they want?

Under the new apprenticeship funding system, there will be 15 funding bands which determine an upper limit. These limits can be anywhere between £1,500 and £27,000. It is up to employers to negotiate with training providers what the cost of the apprenticeship will be. If they exceed this upper limit, the extra cost will be paid by the employer.

How does the new system work?

From May 2017, the employers who pay this levy will be able to access funding through a new digital apprenticeship service that enables them to spend available funds on apprenticeship training.  Once an employer buys apprenticeship training, the funds will come out of their digital account and will expire after 24 months unless they are spent on apprenticeship training.

The government has said that they will apply a 10% top up of the funds. This means that for each £1 an employer puts into their account, they will have £1.10 to spend on apprenticeships.

Employers not paying the levy will not need to use the digital apprenticeship service for the moment. It is likely this will be the case until at least 2018.

Is anything else changing this year?

Yes, the National Minimum Wage is changing too.

As of April 2017, apprentices have the right to earn £3.50 per hour. They are entitled to this if they are under 19 or aged 19 or over and in the first year of their apprenticeship. Apprentices are entitled to the minimum wage for their age if they are over the age of 19 and have finished their first year of apprenticeship.

Our Employment Law Advisers are always on hand to help you through the new system, drafting contracts of apprenticeships, understanding their rights and so much more.