Use it or lose it! How to maximise your apprenticeship levy funds

Apprenticeship Levy

I can’t believe it’s been a year since apprenticeship reforms and the levy was launched – but that’s time for you! Over the last 12 months most HR and L&D professionals responsible for managing the reforms and the new levy would agree that the early days were not completely plain sailing. Much like GDPR now!

Initially, the rules seemed complex and it took a bit of time to work out. Information from the government took time to get published and access to the apprenticeship digital account wasn’t that easy. This said, a year on the general consensus is that most people have got to grips with the changes.

This early confusion meant some businesses were cautious about their approach, waiting to see ‘how everyone else got on’ and stalling their plans. As a result, their levy pot just kept on growing. In another 12 months, any unspent funds more than two years old will be deducted automatically from the digital accounts.

So, what can be done now to maximise the apprenticeship funds?

My Top Tips:

Focus on internal staff

Ideally look for opportunities to implement programmes that support multiple employees rather than just single employees? Management Development programmes are an obvious starting point, particularly as managers are pivotal to driving performance and many have not received any structured training for many years now.

Look at all staff under 25 years old

Anyone under the age of 25 who is enrolled on an apprenticeship programme will be exempt from employers national insurance whilst they are doing the apprenticeship. On a £25,000 salary this equates to a £191 per month saving for the business. In essence this means that businesses with a payroll bill less than £3 million per year who only pay a 10% contribution towards the programme – will make money by developing their staff. And levy paying organisations benefit by recouping some of the funds they have paid into their levy!

Swap commercial training costs to the new apprenticeships

Look at where training budgets are currently being spent on commercial training and swap over for the new apprenticeships.  Many companies are still paying for expensive courses unnecessarily. An example of this is you can now do accountancy apprenticeships which include CIMA/ACCA/ACA/AAT qualifications. And you can now swap over from commercially paid courses part way through – so you don’t need to wait till then end! The saving on ACCA/CIMA equates to at least £12,000 by swapping to the apprenticeship model.

Recruit trainees to start in the summer

The summer is the best time to recruit apprentice school and college leavers and now is the time to start recruiting them – before they leave school and college.

Gift 10% of your funds to another organisation

You can now donate up to 10% of your levy pot to a third party. Why not use existing relationships with an organization in your supply chain or a charity to support them in a way that would add value and at the same time boost your CSR activity.

Relax: if you don’t spend all your levy funds – know that they will go to a good home

Rushing to spend your levy could damage the reputation of apprenticeships longer term in your organization if decisions are not made carefully. If your funds are unspent, then rest assured they will go to a good place and be used to support someone else in the UK to develop their skills.

It’s worth remembering that it’s still early days for the new apprenticeships and the 2017 reforms. The topic is constantly under review and scrutiny. Many businesses would like to see more flexibility in how the levy can be used to fund things like wages, rewards and expenses for apprentices or other shorter-term training that is highly valued by business but not available as an apprenticeship. The government is lobbied regularly on these matters and is open to what research tells them, so we may yet see some further exciting amendments in the future.

If you’d like to talk to us about how you can make the most of your levy funds then please get in touch today on 0161 200 1673, visit our website and social media or email contactus@theapprenticeacademy.co.uk