Apprenticeship Levy: the facts so far

‎With more than 9,000 apprentices employed across the UK’s Aerospace, Defence, Security and Space industries, our sectors are at the forefront of providing high quality training and highly skilled, rewarding careers.

Aerospace ‎ has a long and proud history of supporting apprenticeships. Many successful leaders across the sector can trace their success to their early years as an apprentice.

The value of apprentices is such that industry has worked collectively with Government to deliver the Trailblazer initiative which aims to shape the future standards we want our apprentices to achieve, whether that be in manufacturing, engineering, maintenance and repair or air side. This ensures industry gets the right skills needed to continue delivering the globally competitive output that is so important to national prosperity, and apprentices are assured their careers are getting the best possible start.

Much has been spoken and written about the Apprenticeship Levy. Is it just an employment tax or is it a really opportunity to address some of the current and future skill shortages the UK and we in Aerospace are facing?‎

Based on what’s known today the key points employers should know about the Apprenticeship Levy are: ‎
• The levy will apply to employers across the UK but will only be paid on annual pay bills in excess of £3 million
• It ‎will be charged at a rate of 0.5% of an employer’s pay bill. ‎ To keep the process as simple as possible, pay bill will be based on total employee earnings subject to Class 1 secondary NICs‎
• Each employer will receive an allowance of £15,000 to offset against their levy payment
• The levy will be payable through Pay As You Earn (PAYE) and will be payable alongside income tax and National Insurance
• Government will create an online portal known as the Digital Apprenticeship Service, which all organisations will have access to, regardless of whether they have contributed to the levy. Employers can use the portal to ‘shop’ for apprenticeships, find accredited training providers and pay for training with their digital vouchers
• Only employers in England will receive funds in their digital account to spend via an e-voucher on apprenticeships training
• As skills training is a devolved policy area in Northern Ireland, Scotland and Wales, we are working with these Asmiatrations to understand what their response will be
• It will be introduced effective from 6th April 2017.

We expect the Department for Business Innovation and Skills together with the Department for Education will issue details outlining the broad operating model on how employers will access and use the levy in Spring, and by Summer provide draft funding arrangements including incentive and top-up proposals to enable employers and training providers to start planning.

Final details of the apprentice funding proposals are expected to be confirmed in the Autumn Statement.

Naturally there are many questions which remain unanswered, including the commitment that “employers in England that pay the levy and are committed to training will be able to get out more than they pay in.”‎

‎We in Aerospace are working very closely with Nick Boles the Minister for Skills and the Devolved Administrations to ensure that we find a solution that’s not only good for Aerospace but for the UK as a whole to ensure industry and training providers can practically deliver the additional high quality apprenticeships our economy needs‎.