How is the apprenticeship levy being adopted by the public sector?

Written by YPO on 10 August 2018 in Sponsored Article
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Nearly two years after the introduction of the apprenticeship levy, public sector organisations must ensure they use the money they have contributed before it leaves their ringfenced accounts and moves to general government funds. Lizzy Grayson, category manager – corporate services at leading public sector procurement organisation YPO, explains the challenges facing public sector employers as they invest in apprenticeships, and how they are overcoming them

Following its introduction in April 2017, the apprenticeship levy has been accumulating funds for the investment in apprenticeships within UK businesses who spend over £3m on payroll each year. The levy stands at 0.5% of an organisation’s annual pay bill.

Due to the vast nature of public sector organisations such as local authorities, who employ a large workforce across multiple departments, they are accruing a significant sum of money to invest in both new staff and their existing workforce.

Funds which accrue are ringfenced for two years and following this point, they start to exit the isolated accounts where they have been sitting and filter elsewhere into government funds where they are inaccessible to the business which has accrued them. As such, businesses who started paying the levy when it was introduced will see funds from those initial months of payment filter out of their account and the overall funds will stagnate if they are not used for training opportunities.

The ticking clock as April 2019 approaches has meant that there has been an increased realisation across the sector that businesses must seek to understand how they can use the funds being held for them and implement the relevant processes for them to be able to take advantage of the training opportunities it could fund.

Organisations across the public sector are managing their commitment to apprenticeships in different ways – with some requiring dedicated roles to manage the programmes and others upskilling existing colleagues to deliver apprenticeships with the support of external suppliers.

Due to the varied nature and requirements of businesses, YPO has worked to develop an Apprenticeship Framework which provides a solution for organisations no matter how they intend to meet their internal apprenticeship targets, as well as those set by central government. 

In addition to providing different opportunities to recruit a supplier, the YPO Apprenticeship Framework will support the education of the team members within an organisation seeking to understand the most valuable way for them to develop their programme.

The education element of the Framework is very important due to the fact a number of statistics, targets and ways in which the apprenticeship criteria is reviewed is continually evolving. A particular area which is challenging the traditional thinking in some organisations is the change from frameworks to standards.

Apprenticeship frameworks provided criteria which the apprenticeship was required to meet and was easily understood due to its tick box nature. In run up to 2020 Frameworks are being replaced with Standards which are much more person-centred and provide a less quantitative approach to managing apprenticeships.

In addition to being more person-centred, standards are employer-led and developed by employers to ensure that employees and new staff are gaining skills are in the required areas. Each standard covers a job specific role and sets out the knowledge, skills and behaviours an apprentice will need to be competent in their role and meet the needs of employers in the sector.

By its nature, for organisational staff who are developing apprenticeship programmes alongside existing roles, the new standards approach has required some additional thinking and understanding of the resource involved in the apprenticeship levy implementation. 

In the long term, it is expected to offer greater opportunities for the person undertaking an apprenticeship point of view but from an organisational perspective it requires more processes and a greater understanding of the different ways in which individuals learn and improve their skills base.

There has also been the misconception that apprenticeships are only open to young people out of employment which has meant that some organisations have not immediately understood the benefit of the apprenticeship levy to them. The apprenticeship levy pot for each organisation is available for use for any potential or actual employee if they are a UK resident.

The amount of funds available to the apprenticeships is variable dependent on the sector and role, for example, there is £3,000 available across twelve months for an adult care worker apprenticeship at Level 2 whereas there is £24,000 available across three years for a police constable apprenticeship which results in a degree.

When it comes to the standards and funding for the varying roles being confirmed, it’s a trailblazing group who propose banding and criteria for the standards based on the courses that have been available in the past across a variety of providers. 

The proposals from the trailblazing group are then reviewed by the Education and Skills Funding Agency (ESFA) who will either approve or reject and amend the funding amount which will be available for employees and individuals undertaking an apprenticeship in that role.

It has taken time for many organisations to understand not only the benefit of the apprenticeship levy but also consider the best way in which to implement it in the most effective way for their organisation. The number of uptakes to date has been variable. Following the launch of the YPO Apprenticeship Framework and organisations becoming more confident in their approach, we expect to see an increase in apprenticeships across the public sector.

A key consideration for public sector organisations during this time, especially if they have got to grips with their own apprenticeship programme processes, will be if they wish to spend more on apprenticeships than is in their isolated pot. While on the outset this might seem counter intuitive, due to the expectation that some businesses and organisations might not utilise their available funds, the government have announced that any organisations who overspend on apprenticeships will only have to contribute 10% of the overspend costs.

This means that for the police force, if they overspent by two apprenticeships rather than pay the full cost of £48,000 they would only have to pay £4,800. This is a significant saving for any organisation and public sector organisations are arguably best placed to take advantage of this feature of the Apprenticeship Levy. 

To learn more about YPO’s Apprenticeship Framework and YPO’s wider Framework portfolio visit ypo.co.uk

About the author

Lizzy Grayson is category manager at YPO

About YPO

  • - YPO is the largest public sector buying organisation in the UK. Fully owned by 13 local government member authorities, YPO has also established formal relationships with further 65 organisations - known as associate member authorities - across local government and the wider public sector. 
  • - YPO has an annual turnover in excess of £660 million, with a range including approximately 30,000 products and 80 public sector framework contracts.
  • - Established in 1974 to aggregate the procurement spend of its owning local authorities, YPO has helped drive public sector efficiency savings through its bulk buying power for product supplies and centralised contract services initiatives.
  • - YPO won the ECMOD Direct Commerce Award 2016 for ‘Outstanding customer service B2B’ and ‘Best Catalogue Production’ in 2017.
  • - YPO won the ‘Team of the Year’ award at the Supply Chain Excellence Award in 2017 as well as the ‘Outstanding Customer Service’ Award at the Scotland Excel Awards in 2018.

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