The government’s apprenticeship levy comes into force on April 6. In the first of a series of articles, Robin Searle explains what will change and the implications for businesses
The clock is ticking towards the introduction of the government’s new apprenticeship levy – but experts warn that many travel firms have yet to fully understand how the changes
will affect their business.
For larger companies with a pay bill of more than £3 million, the introduction of the levy in just over two months will have an immediate effect, as they will be required to pay 0.5% of their payroll each month to help fund apprenticeships.
For those with a pay bill under £3 million, additional changes to apprenticeship standards and assessment and increased funding, as a result of the levy, will have an impact on how they deliver staff training.
People 1st, the employment and learning organisation for the visitor economy – including travel and hospitality – was nominated by employers within the sector to oversee the quality of the assessment for the new apprenticeship standards.
Annette Allmark, director of strategic policy, said many companies within the sector had planned for the changes, but warned that many still needed to fully understand the implications and the opportunities.
“There is still a job to be done to ensure all businesses understand the new apprenticeship standards and how the levy and funding will affect them,” she explained.
“Some businesses may have put things off last year, and some may even have doubted it would be implemented. Now we’re in 2017 they are realising they need to plan for it.”
“Many companies might not be aware of the wider changes to apprenticeships, including the new standards and the financial benefits of taking on apprentices.”
The levy will be introduced on April 6, with the government hoping to raise £2.5 billion and reach three million apprenticeship starts between now and 2020.
The structure has come under fire from critics who object to a new “tax on business” and question whether financial incentives will force companies to abandon or alter successful training programmes in favour of more cost-effective apprenticeships.
But with just over two months before its introduction, there is no doubt that all businesses need to be aware of the implications.
The latest on apprenticeships
People 1st has produced guidance notes about the levy and funding, which can be found at people1st.co.uk/apprenticeships. Key points include:
• Employers with a pay bill of over £3 million will pay a 0.5% levy, paid monthly to HMRC. Employers will then be able to access the proportion that relates to their employees in England via their account on the Digital Apprenticeship Service (DAS).
• Employers will receive a £15,000 annual allowance to offset against their levy and the government will also top up monthly levy accounts by 10%.
• The first levy payment will appear in an employer’s levy account in May 2017.
• Non-levy paying companies will have access to the DAS from 2018, but will continue to access funding for apprenticeships via training providers until then.
• The government will pay 90% of the cost of apprentices for SMEs (those outside the levy) or for levy-payers who wish to spend more than is in their account.
• Training can be provided by an external provider or internally by an employer if approved as an employer provider by the Skills Funding Agency.
• The new apprenticeship standards replace existing apprenticeship ‘frameworks’ and include a new ‘end point assessment’, which is graded.
• The primary travel-focused standard – for Travel Consultant – has been devised by a ‘Trailblazer’ group made up of companies in the corporate and leisure sectors. This standard will fall into a funding band of £9,000 maximum payment per apprentice after May.
• There are 18 standards in the wider travel, hospitality and aviation sector, in addition to others relevant to non-travel specific employment areas,
such as management.
• There is no age limit for apprentices, but businesses will be incentivised to take on 18-19-year-olds.
Nominations extended for advisory board
Nominations for the first travel apprenticeship advisory board have been extended until tomorrow (Friday, January 27) to allow all interested parties to put themselves forward.
The board will include six employer members with voting rights, in addition to representatives from People 1st, Abta, the GTMC and nominated partners such as a college and a training provider, who will not be able to vote.
The board will be recognised by government to ensure that apprentices are consistently meeting the industry standard and they remain fit for purpose. Employer members each hold a place for a two-year term.
Nominations will be considered by a panel including Abta and the GTMC, with membership of the board to be confirmed during February. The board will represent employers of all sizes, with members committed to employing at least one apprentice.
Travel Weekly is to focus on apprenticeships throughout 2017
This feature is part of a year-long Travel Weekly series focusing on apprentices in the travel industry, run in association with headline partner Virgin Holidays.
The series, which is also being backed by Abta, the GTMC and People 1st, will include features on the impact of the new apprenticeship structure on the travel industry, and will highlight companies and individuals as they adapt their businesses and develop potential leaders of the future.
Travel Weekly will also host a special Business Breakfast event in the run-up to the introduction of the new apprenticeship levy.
David Geer, interim managing director of Virgin Holidays, said: “We are delighted to support Travel Weekly’s series of activity focusing on apprenticeships in the travel industry. Virgin Holidays introduced its apprenticeship scheme in 2012 and, like many in the industry, we are looking at how the new apprenticeship levy and structure will affect how we support and nurture the rising stars of travel.”
He added: “All companies need to be aware of the potential impact of the new approach to apprenticeships on their businesses, and we look forward to working with Travel Weekly to focus on the challenges and opportunities facing the industry and ensure young people are given the opportunity to succeed in this industry.”
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