This week the Department for Education released guidance for schools on the Apprenticeships Levy that will come into effect next month. The Levy has been constructed in such a way that most schools will end up paying it. There will also be changes to funding for apprenticeship training for all employers.
All public sector employers, including schools, will need to consider how they can increase the number of apprentices in their workforce.
- it applies to all employers operating in the UK, but only employers with an annual pay bill of over £3 million will pay the levy
- charged at a rate of 0.5% of an employer’s annual pay bill
- all employers will have an annual levy allowance of £15,000 to be used to fund training and assessment only (not wider costs such as salaries) for apprentices
- at the end of each month, employers will receive a 10% top-up to the levy contributions they have made that month
What do school leaders need to know?
The way in which the levy applies to schools depends on the type of school and the overall employer. Below is a breakdown of each type of school and who will be accountable for paying the levy in each case.
Voluntary-aided & foundation schools
– the governing body is the employer and if its pay bill is more than £3m, it will need to pay the levy
Community and voluntary-controlled schools
– the local authority is the employer and those with a pay bill of over £3m will pay the levy for schools under their control. The LA will advise its school on whether they need to take account of the apprenticeship levy in their annual budgets.
– the employer will be the governing body, or the local authority if the school is voluntary-controlled
Free schools and schools in single academy trusts
– the trust is generally the employer and if its pay bill is more than £3m then it will need to pay the levy
– the MAT itself is generally the employer and if its bill is more than £3m then it will need to pay the levy
– whether or not individual schools in a co-operative trust pay the levy depends on the degree of control that the trust has over the schools:
- Where the trust appoints a minority of governors, the school will only pay the levy if the school’s annual pay bill is more than £3m
- Where the trust appoints a majority of governors, the £15,000 levy allowance will be shared between the schools and so individual schools with a wage bill of less than £3m may have levy liability depending on how the levy allowance is allocated
- However, co-operative schools that have previously been part of a local authority’s pooled PAYE scheme will need to consider whether they need to separate from this arrangement
– whilst the guidance document makes no mention of this, independent schools will pay the levy if their annual pay bill is more than £3m
Subject to parliamentary approval of regulations, public sector bodies in England with 250 or more employees will be set a target to employ an average of at least 2.3% of their headcount as new apprentices over the period 1 April 2017 to 31 March 2021. The target is for new ‘apprenticeship starts’, which includes both existing employees who start on an apprenticeship, and newly employed apprentices.
Schools in England with 250 or more employees will be in scope of the target, and will therefore need to have regard to it. They will be required to publish certain information annually on their progress towards meeting the target, and send information to the Department for Education. The Department for Education will set out employer guidance on what information needs to be published and shared, and the specific format in which it should be returned, soon. The first reports will be due by 30 September 2018.
What should your school do?
The Government proposes that schools should:
- Consider how you can use apprenticehips in your school. You can access government co-investment regardless of whether you pay the levy. You can search for apprenticeship training and find out about providers in your area by using the simple ‘Find apprenticeship training’ on-line tool.
- Check whether your school needs to pay the levy.
- Check whether you school is in scope for the public sector target.
- If your school is part of a larger employer group (a local authority of MAT for example), contact them to agree how you will access funds available to spend on apprenticeships.
- Decide whether you wish to register as an apprenticeship training provider so that you can directly design and deliver the content of the training that your apprentices receive.
While the above covers the most important information for schools regarding the apprenticeship levy, we advise you read the entire guidance paper published by the Department for Education.