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September 2018
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How to make the most of the apprenticeship levy

How to make the most of the apprenticeship levy

In April 2017, legislation that presented a complete overhaul of how apprenticeship training in the UK is structured and delivered came into effect. The intention of the apprenticeship levy is to increase funding and boost the volume of apprenticeships available within the UK, both in public and private sectors. But with apprenticeship numbers reportedly falling across the UK, the levy has become a hot topic with many different moving parts. Lizzy Grayson, Category Manager for Corporate Services at YPO, offers her insights into the workings of the apprenticeship levy for public sector organisations and how to make the most of the new procurement process.

How does the levy work?

The levy works by applying an annual 0.5% charge on an employer’s total payroll which is automatically deducted via PAYE. The funds raised are isolated to the individual organisation’s levy pot, with this sum then being allocated to procuring apprenticeship schemes. This only occurs once the payroll of the employer is in excess of £3million, placing many public sector organisations within the bracket. In addition, each employer that is paying into the levy will each receive a flat annual allowance of £15,000 to counterbalance their levy payment. If necessary, employers will also have the ability to access further subsidised funding for apprenticeships.

Procurement processes with many moving parts can be difficult to negotiate when procuring apprenticeship standards. What seems like a simple process can take organisations several months, incurring administration costs and taking valuable capacity time.  This factor, combined with the nature of the apprenticeship levy process being new to all parties, can be seen as one of the many reasons that the uptake number of apprenticeships has decreased since last year. 

How are new standards created?

As the Education and Skills funding agency changes apprentice framework systems into standards, trailblazer groups are created across all sectors to develop apprenticeship standards. Trailblazer groups are created by the ESFA and have representation from different areas of the sector. 

What does it mean for public sector organisations?

Public sector organisations have previously had a requirement for apprentice’s to support their business needs, it helps develop individuals in a unique way, giving them the skills and experience of delivering in the workplace. Since the introduction of the apprenticeship levy, this is increased and many organisations want to utilise their levy to the maximum and deliver more apprenticeship programmes in a variety of areas. The funds and management of apprenticeships will inevitably increase across all public sector organisations, many of which have recruited dedicated apprenticeship managers to develop specific programmes within their organisations. This has become especially prevalent with the department of education recently setting the target of 2.3 per cent of public sector workforces to be made up of apprenticeship roles by 2020.

Due to the increase in spend across each public sector organisation, they will need to procure apprenticeships in line with the EU Public contracts regulations

As of today there are 305 different standards across routes such as the emergency services and social care. However, this number is rapidly increasing to include more apprenticeship roles as trailblazing bodies approve new sector standards. With over 2,600 providers approved on the Education and Skills Funding Agency register of approved apprenticeship providers listing, public sector organisations may understandably not be fully aware of every apprenticeship scheme available for procurement.

It is more important than ever for public sector organisations to find the appropriate apprenticeship provider. The market is rapidly growing so access to national and regional providers will be key to delivering a successful apprenticeship programme. The challenge will be to ensure that value for money is achieved, due to the changes to levy bandings many providers are delivering close to the banding rates. We recognise that our role in this is to help public sector organisations understand the added financial and quality value that they can achieve.

YPO recognises that it can quickly become confusing for public sector organisations as they attempt to choose the best procurement framework for their organisation. Subsequently, we are launching the first national Apprenticeship Framework that covers all standards in August 2018, collating compliant routes to apprenticeship providers across the UK. Apprenticeship providers will also be able to bid on a quarterly basis for all current and new standards thanks to the structure of the Apprenticeship procurement framework. The framework will support apprenticeship providers and give them one procurement process that will allow public sector organisations to procure their apprenticeship standards directly.

The framework aims to make spending Apprenticeship Levy funds simpler for public sector organisations by finding each compliant route to market for the procurement of apprenticeships. It is the first and only national framework of its kind and will aim to cover all growing future trailblazing standards. YPO’s framework is aiming to enable apprenticeship levy funds to be spent more effectively and create savings in administration costs for local authorities. Apprenticeship providers across the UK are invited to help bridge the current gap between provider and purchaser by being part of the Apprenticeship Framework. YPO is heavily focused on customer service as a procurement organisation and is committed to helping the public sector engage with the Apprenticeship levy in a positive way.

With many years’ of experience, YPO is one of the leading UK public sector procurement organisations. The organisation is public owned which means profits are returned to public sector customers, which helps gives assurance that maximum savings can be made.

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