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Money for nothing – The Apprenticeship Levy

By Chris Dawson July 28, 2021 - 11:00 am

Adrian Grove, Business Development Director at Qube Learning, wants to spread the word about the generous funding available to SMEs to boost their workforce before the funds are returned to government coffers. It’s basically money for nothing with the apprenticeship levy pot sitting their waiting for you to access it. Read on to find out more:

The Apprenticeship Levy: ‘That’s the way you do it’

If you know the Dire Straits song ‘Money for nothing’, released in 1985, it would be a good track to have playing in your mind while you read this article because it’s about a huge pot of money – around £157 million this year alone – which you, as a small business owner or manager could have a share of.

Any company in the UK with a payroll of over £3million has to pay the apprenticeship levy at a rate of 0.5% of their annual pay bill. A quick back of envelope calculation will tell you that this amounts to a huge amount of money.

The levy contribution sits in a digital account which the employer can use to pay for apprenticeship training. However, it can be difficult for large companies to spend all the money they have paid on the sort of training which the levy is tied to, apprenticeships, and after 24 months any unused levy funds expire and return to the government.

To give you an idea of scale, according to a question asked in parliament of apprenticeships minister, Gillian Keegan in May this year, £1 billion “had expired between May 2020 to February 2021”

You can help spend the money

This is the key point as it relates to you as a small UK marketplace retail business with perhaps 5 – 10 employers. To avoid that money ‘expiring’, employers who pay the levy can transfer the money to other smaller employers who don’t pay the levy. The only requirement is that the money must be spent, as the name of the levy suggests, on apprenticeships or training.

Yes, you read that correctly, your company could use the money other large organisations have paid, to pay for your own apprenticeship training. In classic economic terms this is called ‘a redistributive tax,’ and it’s one which your business could benefit from if you follow just a few simple steps.

What’s the catch?

For small businesses this is one of those rare occasions when there really is no catch – assuming you value what an apprentice can bring to your organisation. All you must do is pay 5% of the cost of the apprenticeship to access a whopping 95% of the remaining cost.
Think of all the work and different tasks required to buy and sell effectively on Amazon or other outlets – selecting stock, organising imports or delivery, checking stock or warehousing, managing your website or IT system, publicity and marketing, customer services and returns – all of these are roles which could benefit from skilled and motivated staff.

This is what you will be developing with an apprenticeship, whilst also ensuring succession and career planning at the same time and hopefully boosting productivity and profit in the long run too.

How to start

Questions you may be asking by now probably include: ‘how do we access the money’ or ‘how do I set up an apprenticeship scheme’. The UK government has taken pains to make accessing the apprenticeship levy money for small businesses as easy as possible and has stated “we want to give smaller employers greater control over their apprenticeship choices.”

Nevertheless, for a small business, transferring unused levy funds and setting up schemes can be complicated and time consuming. There are clear guidelines on the government website: www.gov.uk but for a small company where all hands are already on deck, this can be a job that never quite gets done.

Training providers help

The easiest way to get started therefore is to go straight to a training provider who is incentivised to help you. Training providers specialise in different areas so look for one that covers both your geographical location and type of apprenticeship you feel your business needs.

Qube Learning provides apprentices and training programmes for large organisations such as John Lewis, JD Sports, Peacocks, Matalan and DHL. This is the sort of experience and ability to connect levy fund ‘donor’ and ‘receiver’ you should look for you.

The training providers have step by step guides to encourage you to work with them, an example being this one: www.qube-learning.co.uk/levy-transfers

Many large companies who use the Apprenticeship Levy have massive amounts of funding leftover at the end of the year. This is a huge opportunity for SMEs, who can take advantage of the transfer as a ‘gift’ – it’s a fantastic opportunity to upskill and grow small business workforces from Level 2 or GCSE upwards, at low expense.

Adrian Grove can offer advice on how the levy transfer works and what it can mean for SMEs – and a helpful summary infographic on the levy transfer is shown here.

Step by step

What do Apprenticeships include? Each Apprenticeship programme has its own Standard linked to a specific occupation – these are rigorous, challenging and require the Apprentice to undertake a minimum of one year’s training followed by an End-Point Assessment (EPA).

If you work with a training provider, they will help you find the right programme, organise your staff lists and needs, and ensure the training and EPA is in place. They can also help set up your own Apprentice Service Account into which the levy transfer money is paid each month. If you decide to stop or your apprentice leaves, the money stops, it’s that simple. If you and your apprentice carry on and complete their training you’ve got a new, well trained member of staff almost completely for free.

In the words of Dire Straits ‘That’s the way you do it!’

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