Question 1 - What are the implications of the introduction of the UK Apprenticeship Levy for employers in Wales?
The main implication is clearly the additional ‘tax burden’ placed on employers who are within scope of the levy. However, it needs to be recognised that the introduction of the apprenticeship levy by the UK Government is intended to increase employers investment in skills training, in order to boost productivity, which, is not too dissimilar from the Welsh Government’s aim with the proposed ‘Framework for Co-investment’ as outlined within the Skills Implementation Plan.
The other implication has been the difficulty caused for pan-UK employers, who now need to navigate their way through the funding regimes of the various administrations across the UK.
Question 2 - Will there be different implications for public sector and private sector employers?
In terms of paying the levy, no
However, there is a recognition that as public sectors bodies in Wales are facing budgetary pressures from elsewhere, then the advent of an additional ‘tax burden’ will cause additional financial pressures.
The situation above will make it difficult for organisations who are under increased financial pressure (both within the public and private sector) to recruit new apprentices (aligned to the Welsh Ministers’ priority) in order to re-coup any levy payment which is seen to be theirs.
A key consideration here is what employers can use apprenticeship funding for. Currently, against the background of the Welsh Government’s commitment to “delivering a minimum 100,000 high quality all age apprenticeships over the term of this Assembly” contractual requirements are focusing resources on younger (16-19) learners and higher level (level 4 and above) programmes. Additionally, there are restrictions applied to provision for learners aged 20+ at level 2 and level 3, especially within non-priority sectors.
NTfW understands the need to move the Apprenticeship Programme in the direction above, but with the advent of the apprenticeship levy, there are difficult conversations to be had with levy payers on what it is they can use ‘their’ levy contribution for. Especially in the case of learners who are 20+, been employed for over twelve months, and are wanting to undertake development at level 2 (operator) and level 3 (supervisory) levels.
In terms of the public sector, the NTfW is aware that many local authorities (and indeed other public bodies) currently have a ‘recruitment freeze’ due to budgetary constraints, and as such, are required to deploy existing staff that are at the risk of redundancy to other posts. In many cases, these individuals will require re-training, and/or upskilling to undertake these new roles. Clearly, there is an opportunity here for organisations that face this situation, to use the Apprenticeship Programme to develop their workforce.
Question 3 - Are there any specific implications for employers who operate both in Wales and also throughout the UK (that you have not previously referred to in your response)?
In other parts of the UK, there will be the introduction of a Digital Apprenticeship Service, and eventually all employers will be required to ‘purchase’ their apprenticeship provision using ‘Digital Vouchers’ and will need to negotiate a price with a whole range of apprenticeship providers. This will not be the case in Wales, and this is to be welcomed.
In Wales, employers can chose to work with any provider from a network of over 100 quality assured apprenticeship providers. No ‘transaction’ or financial contribution needs to take place, as the Welsh Government fully funds the provision of learning. This is a clear benefit to employers, as this significantly reduces any administrative burden.
It is clear to employers in England how they will be able to access apprenticeship funding in future i.e. through the Digital Apprenticeship Service, and by using Digital Vouchers for the delivery of their apprenticeship programmes for English domiciled employees.
What is less clear to employers based (or headquartered) in England, is how they will able to access funding for apprenticeships in Wales (and indeed the other Devolved Administrations)
There will be two modes of operation in England for employers. The first will see levy payers funding their apprenticeship provision through the Digital Apprenticeship Services, and non-levy payers needing to link directly with a provider to access provision. In Wales, all employers can access provision though one mechanism - the provider network in Wales. This is clearly a benefit to Welsh employers.
It is worth noting at this stage, that non-levy payers in England will be required to make a 10% (financial) contribution to their apprenticeship provision, whereas employers in Wales are able to have their apprenticeship provision fully funded by Welsh Government. This is clearly something that the Welsh Government should be promoting, in order to demonstrate the differences between the relevant systems.
Question 4 – If you have concerns about the funding of apprenticeships after the introduction of the UK levy, what would you like the Welsh Government to do to address your concerns?
In preparing employers in Wales for the advent of the apprenticeship levy, the Welsh Government should:
1. ensure that the positive messages around the success of the Apprenticeship Programme in Wales reach all employers, especially those who are impacted directly by the apprenticeship levy;