The Spending Review: What It Means For You

In his combined autumn statement and comprehensive spending review yesterday the chancellor George Osborne announced that: “Education and skills are the foundation of the economy in this country”.  There was a lot in there for employers to digest not least the unveiling of the 0.5% apprenticeship levy.  City & Guilds Kineo has put together a short digest on what that statement on the levy might mean for you, your apprenticeship programmes and your learning and development initiatives.

What we learnt

The levy percentage has been set at 0.5%.  Those with wage bills below three million pounds will not be levied.  Those who are will have a £15,000 allowance to offset against their levy payment so in real terms that means 98% of employers will not pay.  The levy system will commence in April 2017 and create a three billion pound pool for employers to spend on apprenticeships.

The government will create three million apprenticeships by 2020 and it will increase the amount of funding per place.  The business secretary Sajid Javid will create a business-led body to set standards for the new system.

We were pleased to see Osborne’s decentralisation agenda and reinforcement of the Northern Powerhouse vision of this government. It would be logical to assume from this that that agenda, in combination with employers holding all the funding for apprenticeships, means that you would be wise to scale up your relationships with Local Economic Partnerships (LEPs).  

As Nick Boles the minister for education explained at the Association of Colleges conference last week, employers not linked with their local chambers and LEPs will miss out on the primary way of ensuring that young people from their geographical operational areas are trained in the skills that businesses need.

At the same conference it was announced that the Skills Funding Agency (SFA) will no longer hold funds and award contracts for apprenticeships after April 2017.  The funds will be drawn down only when the employer uses a digital voucher.  That could mean a shift in relationships between employers and colleges, private training providers and subcontractors as each type of organisation vies for funding.  The digital voucher scheme will be tested during 2016.

Where we need more clarity

The autumn statement gave us more clarity around the new levy but there are still lots of questions remaining about the new system to which we will be looking for answers over the coming year.

What can the vouchers be spent on?

Will you be able to spend training vouchers with your suppliers therefore upskilling right through the supply chain?  This would help to make the most of your compulsory levy and potentially bolster your CSR agenda to boot.

UK or English payroll?

With Osborne repeating the Conservative party’s claim of being a ‘one nation’ party, will the levy be tied to your UK or English payroll?

Will changes in BIS impact Skills?

Many political commentators are predicting a reduction or absorption of the Department of Business, Industry and Skills into another government department.  Could this have further implications for the apprenticeship system?

Filling 3m apprenticeship places

Now that the government has put apprenticeships centre stage, how can employers help attract more learners to apprenticeship schemes?  Could your business work with the new Careers Advisory Service to increase the amount of young people who see apprenticeships as an attractive alternative to A-levels or university?  How else can employers input into this decision making process to ensure that they are presented with the breadth of apprentices that they would like to have access to?  One of the ways that City & Guilds Kineo can help you to do this is by helping you make the careers path through your business transparent and exciting to all stakeholders.      

Participation age

We also still need clarity about raising the participation age.  Will this be allowed?  How flexible will the government be?

Creating great end assessments

What are the implications for end assessments?  We need the right assessments for the right people in the right industries and employers will need to work closely with experienced organisations like City & Guilds to make that happen.

I hope that this quick digest has helped to clarify and highlight what yesterday’s announcement means for your organisation’s skills agenda.  Rest assured that we will continue to participate in Trailblazer consultation groups, workshops, briefings, policy creation and lobbying to clarify those unknowns and keep you updated on all the useful and important news we uncover.

City & Guilds Kineo is the employer facing arm of the City & Guilds Group and as such has a wealth of advice to offer both from the qualifications aspect and also how our cutting edge technology can help take some of the pain out of the big changes ahead.

Please get in touch with us via the form below if you’d like to discuss this further and we’ll get right back to you.

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