4th March 2016 at 00:00
Countdown conundrums

Levying it late

We’re now just over one year away from the introduction of the much-hyped apprenticeship levy. The government has insisted that the system will be up and running by April 2017, but with many details still to be finalised – and a fresh-faced group of civil servants at the Department for Business, Innovation and Skills (Bis) given the unenviable task of turning the grand plan into reality – the time frame looks more challenging with every passing day. Those in the know expect chancellor George Osborne’s 16 March Budget to provide more details, but no one seems to be under any illusions that the full picture will become clear before the summer, leaving precious little time for fine-tuning.

Word has reached FErret’s burrow that a phased introduction appears the most likely way the government can save face by at least partially hitting its April 2017 start date. This would involve a levy system initially applying to levy payers only (those with a wage bill of more than £3 million a year). For non-levy payers, old-framework apprentices would continue under the current funding system; the new-standard apprentices would be funded under the Trailblazer system until Bis is ready for a full switch. And it appears likely that, to control the amount of funding diverted to non-levy firms during the interim period, the current Skills Funding Agency system of allocating contracts to providers could limp on for a while yet.

Cap in hand

One major decision yet to be announced is how exactly apprenticeships will be funded. Will there be a Trailblazer-style cap for each standard, or a fixed funding rate per apprentice?

FErret understands that this is still up in the air. But if Bis opts for a cap, this would be set at 100 per cent of the cost so that no further contribution from the employer would be required (although this brings its own difficulties). And it seems that there is also still an appetite for offering additional incentives for 16-18 apprentices, and on completion of the apprenticeship, in order to boost participation among younger people and improve completion rates. This would have to be routed through providers to start with, but officials still hope to eventually pay these directly to employers.

Vouchers labyrinth

We know that once employers have stumped up 0.5 per cent of their pay bill, they will be able to access electronic vouchers that can be used to acquire training funding for their own apprentices. The vouchers will, in turn, trigger a payment to the training provider. But large employers and public sector organisations are lobbying to be allowed to use their vouchers with their supply chains, either by pooling them locally or transferring them. The knock-on effect of managing this through a digital voucher system is enough to have government IT experts running for the hills, so it may be that this flexibility does not emerge until 2018 at the earliest.

The end of subcontracting?

With the current system likely to continue beyond next April for non-levy payers, existing arrangements for subcontracting appear likely to continue for now at least. But there are some senior figures bitterly opposed to the practice – including, reportedly, skills minister Nick Boles himself. Hence the announcement last month that subcontracting will be banned for provision funded through advanced learner loans to “protect the interests of learners”. A government review of subcontracting has even been mooted. Watch this space.

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