One year on: The uneven success of the apprenticeship levy

Schools and academy trusts are not making the most of the millions of pounds they pay into the apprenticeship levy, over a year on from its introduction.

Concerns about schools’ understanding of the levy have been raised by a training specialist, who said he was “shocked” by how little was known, while a senior MP has also started looking into the issue after raising concerns with ministers.

Under reforms that came into effect last April, employers with an annual payroll of more than £3 million have to pay 0.5 per cent into the apprenticeship levy. They can then use money from the levy pot to pay for training.

Dave Cobb, from the National College of Education, which was set up last October to run courses aimed at helping schools use their levy money, said his organisation had spoken to more than 40 trusts and signed up around 400 apprentices, but was worried about schools’ engagement.

“We have been quite shocked about the lack of awareness,” said Cobb, who said schools are spending a fraction of the money they put in.

Dave Cobb

“£180 million been deducted from schools’ budgets since April last year. Way under 10 per cent of that has been spent; it’s a massive problem.”

Schools aren’t alone in ignoring their levy funds. The number of people starting an apprenticeship has fallen by around 30 per cent since the levy was introduced this time last year.
The skills minister Anne Milton raised concerns in October about how many large companies were unaware of the levy.

Schools Week approached the 10 largest multi-academy trusts in England to ask about their progress on apprenticeships, and found some are much more active than others.

The Academies Enterprise Trust is England’s largest academy trust with 64 schools. It currently has 72 apprentices, while eight more will start in May, and 31 in September. Overall AET will have taken on 51 new apprentices in 2017-18, up from 39 in 2016-17.

The lack of education-focused apprenticeships has made it “difficult to utilise funding in full and effectively”, a spokesperson said.

Oasis Community Learning has 50 apprentices on teaching assistant (TA), business and administration, and IT courses across 49 schools. This is double the number the trust had before the levy was introduced. It hopes to grow this to 150 by next year.

The 36-school Ark trust has 32 apprentices on similar courses to Oasis, but couldn’t say whether numbers had increased since the levy came in. It hopes to boost numbers next year.

At this critical time, I find it strange that the government hasn’t analysed what the benefits are for schools

Reach2, which runs 52 primary schools, has taken on five new apprentices since the levy came in, all for TA roles.

The 43-school Kemnal Academies Trust told Schools Week it had some apprentices in “support functions” but was unable to give a specific number.

The Harris Federation, which has 44 schools, said its number of apprentices was “too small” for it to give any comment.

Ormiston Academies Trust, United Learning, the Oxford Diocesan Schools Trust and Delta Academies Trust did not give any information.

Local authorities pay into the levy on behalf of schools they oversee. Many charge the levy payments back to their schools in the form of a top-slice from their budgets.

In Kent, the council has gone from employing 40 apprentices at 28 schools in 2016-17 to 111 at 75 schools this year.

Most apprenticeships have been in primary schools, but secondaries are “starting to take an interest”, said David Knox, Kent county council’s apprenticeships officer. Some are looking into “growing their own”, where they can’t recruit maths or science teachers.

Anneliese Dodds, the Labour MP for Oxford East, criticised the government for failing to analyse the impact of the levy on schools.

A shadow Treasury minister, she contacted the schools minister Nick Gibb, but was told the government is waiting to receive reports from schools on their progress, which aren’t due until September.

“We’ve had schools consulting on whether they should reduce their hours to save money,” she said. “At this critical time, I find it strange that the government hasn’t analysed what the benefits are for schools.”

“We are working with schools to make sure they make the most of the levy and the opportunities it provides,” a DfE spokesperson told Schools Week.

A new postgraduate teaching apprenticeship was approved by the government last October, and will take on its first candidates in September.

Everything you want to know about apprenticeships but were afraid to ask

Two new apprenticeship-based policies came into effect in April 2017 that have serious ramifications for schools. Schools Week has prepared a handy cut-out-and-keep guide to what you need to know.

First, there’s the apprenticeship levy.

It’s not a tax, the government insists, but a contribution any organisation or business with a payroll of more than £3 million must make – including at schools and trusts.

Organisations above that threshold must pay 0.5 per cent of their total payroll to the government, though each receives an annual allowance of £15,000 to offset against it.

For example, an employer with a payroll of exactly £3 million would not be liable to pay anything, because that £15,000 tolerance would completely offset the charge.

An employer with a £5 million payroll would have to pay £10,000, which is their £25,000 charge at 0.5 per cent of their payroll, minus the £15,000 allowance.

Another way to think about it, is that schools and trusts must pay the government an extra half a penny on every pound they spend above that £3 million threshold.

This is likely to put larger multi-academy trusts at a disadvantage, because while each secondary school subject to the levy technically has access to the £15,000 allowance, trusts with larger bills and therefore much larger levies still only get £15,000.

Although local authority-maintained schools, where staff are employed by the council, don’t have to pay the levy directly, many town halls are top-slicing the levy payments from their schools budgets.

Second, there are the new public sector apprenticeship targets.

These targets apply to all public sector organisations with more than 250 employees. The target is 2.3 per cent “apprenticeship starts” each year. Note, the word is “starts” – it doesn’t mean the proportion of apprentices employed.

This means that any organisation subject to the target must hire a number of apprentices equivalent to 2.3 per cent of their full time equivalent workforce every year.

For example, a school with 300 employees would have to hire seven apprentices a year in order to meet the target. A multi-academy trust with 500 employees would have to make 12 apprentice hires a year.

This focus on starts has prompted some concerns that schools and trusts struggling to meet the target could face having to fire apprentices – or other staff – every year in order to be able to replace them with new apprentices.