The Ascento Blog

Getting the best business value from your Apprenticeship Levy spend

[fa icon="calendar"] Oct 4, 2016 4:03:00 PM / by Chris Ash   

Chris Ash

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 You’ve started paying your levy via HMRC and have funds building up in your Digital Service apprentice account:  What next? 

Typically, the advice you'll hear from many apprenticeship training providers is “use it before you lose it”. This makes sense... you can roll unspent levy funds from one month to the next, but levy funds will expire if you don't use them within 18 months. Apprenticeship training providers would really like you to spend all your levy fund with them before that happens, so they could rush you into spending all your levy money in one go. 

But that's not how we do things at Ascento.

Answer these six questions to ensure your levy spend meets your business needs

We believe there are several key questions for any large employer to answer before they start to spend, starting with: 

1. What are your business priorities?

Your business priorities will determine how you spend your levy.

Do you want to upskill your workforce and improve business performance?

Is your priority cost saving and recouping the levy cost?

Do you want to reduce payroll costs?

Should you use your levy to grow the business?

Do you have a particular area of need or a concern specific to your business?

A reputable apprenticeship provider will be starting the conversation with you around your business priorities, and not jumping straight to how you can spend your levy.

2. How can you use your levy funds to maximise training budgets and make sure that your existing training can now be funded through the levy?

The new apprenticeship standards give greater flexibility in terms of what can be delivered. If you have a graduate programme, this can be funded via degree level apprenticeships.

or do you deliver your own internal management development programmes? How does this work under the levy? 

Your levy fund could give your business so much more than just apprenticeship qualifications. Identify what additional value an aprenticeship training provider can offer before you commit to spending with them.

3. Can you start any apprenticehip training before the Apprenticehip Levy comes in?

Any apprenticeship training delivery you do now does not impact upon your apprenticeship levy funds.

Can you bring any apprenticeships forward, whilst there is no fee, to ensure that you still have a full levy pot to spend on your strategic priorities?

Apprenticeships started before April 2017 will follow the current funding model and will not impact upon your levy.

4. How will the new funding rules affect my business when they are published later in 2016?

Current suggestions are that the contribution for non-levy employers, or for levy employers who have no funds left in their digital account, will be as little as 10%.  This means an £27,000 Level 6 Management degree will cost you only £2,700! 

Combine this with the fact that payment can be spread across the three years of the qualification, and the annual cost to your business is considerably less than the face value of £27,000.

5. Shoud you manage your levy yourself or use a provider to do so?

The key consideration here is if you wish to use an apprenticeship training provider, make sure they are not brokering in other providers and thus reducing the funding that they receive.

If this is happening, commission paid to the sub-contracted provider is likely to come from your levy pot, so it will end up costing you more. You are effectively getting less training for your money because you are funding the brokering arrangement. 

6. How will you control your levy spend internally across the business?

If you have different departments or branches of your business doing their own thing then your levy pot will diminish. The wisest move is to have any apprenticeship delivery controlled centrally, because this gives you an overview on the training spend so you can make sure it meets your business needs.

Remember: the Apprenticeship Levy is money that you have paid

This puts you in the driving seat.  You can negotiate with apprenticeship providers in terms of what you are willing to pay and what you expect them to deliver. 

If someone tells you that your £500,000 apprenticeship levy pot will fund 200 apprentices ,ask yourself this:  Would you pay £500,000 for that apprenticeship and that quality of training and would you spend it on those employees? 

If the answer is no, stop and think again.

Any employer facing the Apprenticeship Levy can contact us at Ascento for free support and advice.

Topics: Apprenticeship Levy