What schools need to know about the apprenticeship levy

Don’t think that the new levy is all about big business, warns John Deaville. All schools, regardless of size, will feel its impact.

Most people are – at least vaguely – aware that the apprenticeship levy, which will be introduced in April 2017, is a payroll tax to fund apprenticeship training, paid by any organisation with a payroll bill of more than £3 million a year.

But not many realise that all schools, regardless of size, will be affected; how so depends on their size and status.

For grant-maintained schools, the levy will be paid by the local authority (as an organisation with an annual payroll bill of more than £3 million), which means the levy will effectively be a 0.5 per cent tax deduction from the school payroll costs. Most local authorities are starting to plan how they can get some value from the apprenticeship levy that they will pay and many will turn to schools, who for many authorities are a major part of the headcount and payroll.

It’s a similar story for multi-academy trusts (MATs), the majority of which will have a combined payroll bill of more than £3 million. MATs will be assessed as a single entity for the levy, hence even though individual schools may have a payroll below £3 million, the overall MAT will be subject to the levy and the 0.5 per cent tax deducted. So many MATs are busy planning how they can use the levy to get maximum value and return on investment.

Small MATs or single academy schools (with free and independent schools) may not pay the levy if they are below the £3 million payroll bill.

Use the levy as a chance to review staffing needs, current and future

However, the introduction of the levy is accompanied by a new apprenticeship funding model for smaller organisations, such as these schools.

Under present funding arrangements, most apprenticeship training, regardless of learners’ age or whether the learner is a new apprentice or existing member of staff, is free for the school.

From April 2017, these schools will need to “co-invest”, or in other words “pay” for a proportion of the apprenticeship training. This is being set as a 10 per cent payment which, whilst not huge, may be troublesome for stretched school budgets.

The only employers who will not have to pay either the levy or co-invest in apprenticeship training costs, are employers with fewer than than 50 employees who employ a new 16 to 18-year-old apprentice.

So some small schools, probably rural primary schools, may still get free apprenticeship training. There are changes even for these schools, however.

Under present arrangements these schools can often claim a £1,500 grant from the government; this will be replaced by a £1,000 contribution from April 2017.

The enterprise bill, another piece of legislation coming into force in April 2017, is a double “whammy” for many schools.

It contains a new requirement for all public sector employers, including schools of all types, to employ a minimum of 2.3 per cent of apprentices as part of their staff.

The only exceptions will be schools with fewer than 250 employees; but again, for grant-maintained and academy groups it is the bigger entity that will be used to assess size, so only independent or academy schools with fewer than 250 staff will be exempt. Organisations not complying with this regulation will be named and shamed and required to submit a plan to come into line.

This all may sound like rather negative, but there is some good news. Many falsely believe that apprentices must be new staff, mainly youngsters, in new job roles, and primarily in trade occupations. However, apprenticeship training is available to existing staff of all ages, in a wide variety of occupations – and increasingly at advanced and higher levels – provided they have a skills need.

Schools can therefore use the levy as an opportunity to review their staffing needs, both current and future, and identify areas where apprenticeship training could help to improve the skills of existing staff, or help to plan for future requirements. Apprenticeships, when well planned and delivered, can benefit the employee, the school and, in the long term, the pupils.

John Deaville is development director at Key Schools Academy

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