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Employers’ Guide to New Apprenticeships and the Levy

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WELCOME TO YOUR COMPREHENSIVE GUIDE ON THE APPRENTICESHIP LEVY, WRITTEN AND CURATED BY

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CONTENTS

04. INTRODUCTION

05. DECODING THE LEVY - 05. THE WHAT, WHO AND HOW - 06. TOP-UPS, SUPPORT AND FUNDING - 07. SPENDING

08. APPRENTICESHIPS

09. WORKING WITH PROCAT - 09. ATTRACT - 10. TRAIN - 11. RETAIN

12. APPRENTICESHIP FUNDING

13. WHAT TO DO NEXT - 13. CONTACT US - 14. FURTHER INFORMATION

16. TESTIMONIAL

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INTRODUCTION | WELCOME

Prospects College of Advanced TechnologyGuide to Apprenticeships and the Levy

We have always strived to make the relationship with our employer customers one of partnership and over many years have evolved to respond to changes in funding rules for apprenticeships and training. The current apprenticeship reforms will again see a significant change over the coming years to the delivery and funding of apprenticeships, not least the introduction of a new apprenticeship levy that comes into force in April 2017.

This levy will transform the way that apprenticeships are funded in England and the way that employers and training providers work together to train their future workforce. Although transition can be tricky and we do not yet have all the answers, these changes can present an extremely positive step change from the existing system for businesses. The new system should be

simple and driven far more by employers. It also largely removes Government as a customer and provides greater parity between the needs of the individual and the employer.

Our business is built on trusted partnerships with industry, one where we understand your business: what is important, where your greatest challenges are, where you want to be. Working together we can then deliver something of real value and ensure that you can attract, train and retain talent and maximise the return on your investment in apprenticeships.

We look forward to working with you in the new world of apprenticeships!

Our mission is clear, to provide excellent technological education which supports the skills needs of key sectors of the UK economy. Specifically, we aim to address a structural gap in the FE system and ensure that UK business has the pipeline of highly skilled people that it needs to compete in a global economy.

Helen RussellDirector of Business Developmenthelen.russell@procat.ac.uk

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What is the apprenticeship levy?

Apprenticeship reform has been in motion for some time now and this Government pledged to support 3,000,000 new apprenticeships over the current parliament (2015-2020).The most recent announcement by Government on apprenticeship reform was in July 2015, when it was stated that there is to be a mandatory apprenticeship levy that will start being paid by businesses in April 2017. The levy aims to encourage employers to engage with and embrace apprenticeships as a mechanism through which to support skills and talent development.

How much levy will I pay?

The levy has been set at 0.5% of payroll. The levy takes into account the total of all employees’ earnings but there is a £15,000 allowance to offset against the levy.Where an employer may operate multi payrolls, they will only be able to claim one allowance.To understand what this means for your business use the levy calculator on our website at www.procat.ac.uk/levy

Example: Total payroll bill of £15,000,000 PA0.5% levy charge = £75,000Less £15,000 allowanceTotal annual levy payment = £60,000

Who will pay the levy?

All employers in the UK with a payroll bill of more that £3,000,000 a year will pay the levy.The levy is applicable to these employers regardless of sector, size of workforce or whether existing levy arrangements are in place (i.e. construction & engineering construction).

Please note, if you are eligIble to pay the levy but the amount you will pay is unlikely to meet your apprenticeship costs, please refer to page 11.

DECODING THE LEVY | THE WHAT, WHO AND HOW

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Top-ups to the fund

The Government will apply a 10% top-up to the funds you have for spending on apprenticeship training in England.The government will apply the top-up monthly, at the same time the funds enter your digital account. That means for every £1 that enters your digital account to spend in England on apprenticeship training, you get £1.10. From April 2017, the levy will be automatically collected annually through pay as you earn (PAYE), in the same way that national insurance and income tax is.

Funding for English and maths training

Apprentices have to meet a minimum standard in both English and maths up to Level 2. There are specific qualifications they must achieve. If your apprentices do not already have these, they may need to do an English or maths course.You will need to work with your provider to identify which of your apprentices require this training. The Government pays providers directly for the Level 1 and 2 English and maths training they provide to your apprentices.

Extra support for employing 16 to 18 year old apprentices

When you take on an apprentice who is between 16 and 18 years old at the start of their apprenticeship, you will receive a payment to help meet the extra costs of employing them. This will be paid to you through the training provider.

It is also worth noting that from April 2016employers will no longer be required to pay secondary Class 1 (employer) NationalInsurance contributions for apprentices under the age of 25. For more detailson this, visit www.gov.uk.

DECODING THE LEVY | TOP-UPS, SUPPORT AND FUNDING

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What can the levy be spent on?As an apprenticeship levy, it can only be used to cover the direct costs associated with apprenticeship training. This may include:- Formal training for apprentices to support the learning requirements of the apprenticeship- Formal assessment of the learners skills and competencies It is unlikely to be able to fund:- Training that is not a recognised apprenticeship framework or standard- The wage of apprentices- The wage of anyone supporting the apprentice- Training that is only pertinent to your business- Capital expenditure Government is still to provide detail and clarity of exactly what the levy can and cannot be utilised for. From May 2017, it is being proposed that all apprenticeship frameworks and new standards will be allocated to 1 of 15 new funding bands. Employers will be able to negotiate the price of the apprenticeship up to its allocated funding cap. More information can be found at - https://www.gov.uk/government/publications/apprenticeships-proposals-for-funding-from-may-2017 At present, your levy can only be used for apprentices you employ directly. Current proposals suggest from 2018 employers will be able to transfer up to 10% of their levy to other employers. This and other responses are still being considered by Government. Please refer to the last page of this document to see when further information is due to be announced.

DECODING THE LEVY | SPENDING

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Apprenticeships are a highly effective way to attract, train and retain talent in your business.

If you have not had an apprentice in your business before it can be difficult to know where to go for information and guidance and how to get started.

APPRENTICESHIPS | A PLUS TO YOUR BUSINESS

So, to start with here are some important facts about apprenticeships

Apprenticeships are real jobs, where people are employed whilst undertaking a work based training programme.

There are hundreds of different apprenticeships available spanning most sectors and many job roles.

Most apprenticeships contain nationally recognised qualifications and some are mapped to professional body standards such as City & Guilds.

Apprenticeships can be undertaken by people at any age but tend to be utilised for those at the career entry stage.

The duration of an apprenticeship will depend on the occupation and the level of the programme i.e. a intermediate apprenticeship may take 18-24 months whereas an advanced or higher may take 36-48 months to complete. All must be a minimum of 12 months.

Minimum employer requirements for apprentices are that they must have a contract of employment with a minimum of 30 hours per week, they must be paid at least the minimum wage and they must be allowed time away from their main duties to complete training and assessment.

There is flexibility for you to provide training for apprentices through your own learning and development functions, should you have the capability and desire to do so. This can also help to integrate the apprentices learning with your own practices.

89% of businesses report that apprentices improve their business (gov.uk).

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ATTRACT

At schoolIt is well documented that more needs to be done to inform and excite young people about STEM (Science, Technology, Engineering and Mathematics) subjects and their related career opportunities. For those who do well and are interested in taking their knowledge further, how do we ensure that they are aiming for a career in engineering, transportation or construction & utilities?PROCAT has a working relationship with over 30 schools and our dedicated STEM Careers Adviser can work with you to facilitate you being involved in existing or indeed running your own attraction activities. Activities may include: young engineers/constructors club taster days industry visits work experience career events

Apprentice recruitmentWe can help you recruit appropriate candidates through our recruitment campaigns and services. We already do this for a number of employers and will work with you to structure job descriptions, post vacancies on the National Apprenticeship Service, hold interviews and assesment days and much more.

WORKING WITH PROCAT | ATTRACT, TRAIN AND RETAIN

SCHOOL YOUR BUSINESS

RETAIN

PROSPECTS COLLEGE OF ADVANCED TECHNOLOGY

A T T R A C T

T R A I N

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RETAIN

TRAIN

Apprenticeships provide a unique programme of training that allows people to learn and apply in a continuous cycle that develops and refines their knowledge and skills. As good apprenticeships require a working partnership between the individual, the employer and the training provider, the programme is as closely designed to your business as possible so results are seen in real time. We encourage and can support you in looking across all parts of your business to see where apprentices can add the most value.

Linked to this, the new apprenticeship standards see the very welcome introduction of a far greater range and volume of higher, degree and even masters level apprenticeships. This allows you to consider creating a graduate level apprenticeship programme or diversifying an existing traditional graduate programme into apprenticeships. They are an excellent way of bringing people into the business at varying levels but also as a way of progressing people once they are ready to move onwards and upwards in your business. PROCAT will be delivering new apprenticeship standards from September 2016 and we would be delighted to discuss these with you.

For more information on the apprenticeships we deliver please visit www.procat.ac.uk/apprenticeshipor call us on 0800 389 3589

WORKING WITH PROCAT | ATTRACT, TRAIN AND RETAIN

SCHOOL YOUR BUSINESSPROSPECTS COLLEGE OF ADVANCED TECHNOLOGY

A T T R A C T

T R A I N

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RETAIN

Research shows that companies that invest in their staff have higher productivity and retention rates. For example, the UK Benchmark Index shows that expenditure on staff training raised productivity by 47% in the manufacturing sector (skillsdevelopment.org).With all the investment made in attracting and training people into the business, it is crucial that there is a plan of progression for them so that you retain the knowledge and skills you have helped to create and achieve a good return on those investments. Whilst skill shortages exist and talent is highly sought after, how are you going to ensure you retain and grow your talent? • Invest in progressing the knowledge and skills of your employees? • Reward high performance? • Develop your future leaders and managers?The answer is of course all of them! Whilst a lot of learning and development takes place ‘on the job’, continuing to progress peoples’ knowledge and skills through a blend of informal and formal training demonstrates both commitment (to the individual) and ambition (as an organisation).Whether it is apprenticeships or other professional development courses that your business needs, we deliver professional training ranging from 1 day to 2 years, that may well meet your needs. We provide flexible open courses as well as fully bespoke programmes just for your business.

Please visit our website for more information - www.procat.ac.uk/business-training-introduction or call us on 0800 389 3589

WORKING WITH PROCAT | ATTRACT, TRAIN AND RETAIN

SCHOOL YOUR BUSINESSPROSPECTS COLLEGE OF ADVANCED TECHNOLOGY

A T T R A C T

T R A I N

RETAIN

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Government states that only a small percentage of employers will pay the levy. However the way apprenticeships are funded is changing for everyone from 1st May 2017. The key points are:

• That all apprenticeship frameworks and new standards will be allocated into 1 of 15 new funding bands• Employers and providers will agree a price for the apprenticeship up to the cap of the allocated band• Non levy paying employers will be expected to pay 10% of the agreed price and the Government will pay 90%• Levy payers will also benefit from the 90% Government contribution after their levy has been fully utilised• If you are an employer with less than 50 employees and are recruiting a 16-18 year old apprentice, you will not be required to make any cash contribution• Employers will receive a £1,000 incentive payment, to be paid through the provider, for hiring a 16-18 apprentice

For more information about apprenticeship funding, please visit- https://www.gov.uk/government/publications/apprenticeships-proposals-for-funding-from-may-2017

To ascertain which funding band the apprenticeship programme(s) you run sits in please visit - https://www.gov.uk/government/publications/apprenticeship-funding-from-may-2017

NOT PAYING THE LEVY? | HOW APPRENTICESHIPS WILL BE FUNDED

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Firstly, why not keep up-to-date by saving our apprenticeship news section as a favourite on your internet browser. www.procat.ac.uk is the first place to check the latest news that will affect you.

We hope the new apprenticeship standards will encourage you to think about introducing apprenticeships as part of your recruitment and workforce development plans. For those who already engage we hope that this will encourage you to think more broadly about what apprenticeships can do for your business.

A team of advisers at PROCAT can help and advise you when thinking about how your business might respond to apprenticeship changes. We can also help in developing and implementing your plans, so please do get in touch to arrange a discussion.

WHAT TO DO NEXT | CONTACT US

0800 389 3589enquiries@procat.ac.uk

www.procat.ac.uk/levy

f - facebook.com/procatofficialT - twitter.com/procatofficiall - linkedin.com/company/procat

APPRENTICESHIP LEVY CALCULATED EXAMPLE

Total payroll £5,000,000 = £25,000 (your 0.5% levy charge)£25,000 - £15,000 (government allowance) = £10,000£10,000 + £1000 (10% top up of that figure paid back) = £11,000

If each apprentice costs £15,000 over 3 years (on average)= £5,000 per apprentice per year with allowance and top up of £11,000You would get value for money by hiring 2 apprentices

WHERE TO LOOK

All information on the levy can be found on our website visit - www.procat.ac.uk/levy

THE APPRENTICESHIP LEVY WILL APPLY TO APPROXIMATELY 2% OF EMPLOYERS

THE APPRENTICESHIP LEVY WILL BE INTRODUCED IN APRIL 2017

WHAT TO DO NEXT | FURTHER INFORMATION

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£5,000,000 ANNUAL WAGE BILL = £25,000 LEVY (0.5%)

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TESTIMONIAL | WHAT THALES SAYS ABOUT US

WHAT THALES SAYS ABOUT US

“THE SUCCESS OF MY COMPANY RELIES ON BEING ABLE TO RECRUIT AND RETAIN PEOPLE WITH THESE SKILLS.”

In the UK, growth in productivity has gone hand in hand with people becoming educated to a higher level. However, weaknesses in our skills base have kept us behind other leading nations. One of these weaknesses is the technical skills gap.

The success of my company relies on being able to recruit and retain people with these skills. It is therefore important that we invest in high quality apprenticeships and training that support the existing workforce and are attractive to the next generation of high-calibre employees.

We chose PROCAT as our training provider because the relationship between the college and their employer partners is one of collaboration and joint responsibility. Being part of the PROCAT GTA (Group Training Association) enables us to draw on expertise, co-design curriculum and benefit from an unwavering commitment to delivering technical professionals for UK industry.

As many employers do, we believe apprenticeships and high quality work based training provide excellent routes for people to develop and tailor skills to the needs of their chosen industry. Thales has been able to work closely with PROCAT to develop engaging and exciting learning opportunities for those with aspirations to work and progress in a way we could not have done alone. I invite you to consider how your business could benefit.

Kini Pathmanathan Vice President, Human Resources, ThalesGovernor, PROCAT.

WHAT TO DO NEXT | FURTHER INFORMATIONTESTIMONIAL | WHAT THALES SAY ABOUT US

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Prospects College of Advanced Technology

Basildon Campus, Luckyn Lane Entrance, Basildon, Essex SS14 3AY

Tel. 0800 389 3589