Why Telcos must act now to prepare for the Apprenticeship Levy

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The government recently announced the long-awaited Apprenticeship Levy will go ahead from early next year. It will have implications on all businesses, regardless of size, and leaves less than a year to prepare.  

Background to the levy

The Apprenticeship Levy is the government’s scheme to fund its target of creating three million apprenticeship placements by 2020.  From 6th April 2017, all businesses with a wage bill of more than £3m will be required to pay the levy, charged at a rate of 0.5% of their annual bill.

How it will work 

Businesses with a payroll of over £3m:

– All companies in this category will have to pay the levy into a digital account topped up by the government by 10%. 

– Money in the digital account will be used to pay for apprenticeship training. If there are not enough funds available, the government will ‘co-invest’ with the employer to cover the shortfall. 

– The government has set up an online calculator to help businesses work out how much they will need to pay. 

– Businesses need to register for the digital account from January 2017. 

– Employers who don’t use the levy fund within 18 months will lose it, and the government will reclaim it and use it elsewhere. 

Businesses with a wage bill of under £3m: 

– Companies in this bracket will not be required to pay, but can draw upon the scheme for apprenticeship funding.  

– Under the current proposals, smaller employers are only required to pay 10% of the cost of training an apprentice and the government will cover the remaining 90% of training costs. The final co-investment rate looks set to be confirmed in October. 

– Small employers (with under 50 staff) won’t pay anything if employing apprentices under the age of 19. 

– They will also receive a £1k payment, with an additional £1k payment to the training provider. 

Should you employ an apprentice? 

According to a report by the Federation of Small Businesses (FSB), around a quarter of small businesses already employ apprentices and a further 24% would consider taking them on in the future. These businesses are making a big difference; the proportion of SMEs with an apprentice is 9% higher than the national average. But what are the business benefits of taking on an apprentice? Research from The National Apprenticeship Service claims 90% of employers feel apprenticeships provide a constant flow of suitably trained staff. Many of our members tell us it also helps them shape an entire workforce from scratch, as staff grow alongside the business. 

Next steps 

The next step for eligible employers is to calculate how much will be paid. Details such as the percentage of their workforce living in England, and the types of apprenticeship training they will need, are needed to fully work out the cost. All payroll systems will need to be set up to start payment from April 2017. 

Further guidance will be released by the government in October 2016, six months ahead of the scheme.  If apprenticeships are not something you had considered for your business, start to look into it. After all, they are vital to the future and development of our industry. 

The ITP has been running its own apprenticeship scheme since 2013.  The programme, launched with support from BT and Virgin Media, has created more than 60 jobs in over 24 organisations which weren’t previously able to gain access to telecoms apprentices.  It has recently launched a consultancy service to help the industry prepare for the levy. To find out more, please visit: www.theitp.org 

Mark Bond, Director, of The Institute of Telecommunications Professionals (ITP) will moderate a roundtable "How can the industry solve the skills gap as we move towards digital business models?" at the Total Telecom Congress on the 4 October 2016. To find out more about joining the discussion, visit the website www.totaltele.com/congress or email rob.chambers@totaltele.com

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