What is the impact of the Apprenticeship Levy on Housing Associations?

// HA News

With just under 2 months to go until the launch of the Apprenticeship Levy, now is the time for Housing Associations to make sure they get value for money from the changes in the apprenticeship landscape.

The Apprenticeship Levy, which will be introduced in April 2017, is a key policy in the government’s drive to hit its target of 3 million new apprentices by 2020. All large employers across all sectors, with a payroll in excess of £3m per year, will be impacted regardless of whether or not they currently offer apprenticeships. 

It has been estimated that the UK’s 30 largest Housing Associations will pay around £7.5m between them, and the Levy has the potential to impact hundreds of other Housing Associations, requiring them to potentially change their approach to recruitment and skills development for their own staff and those in their service supply chain.

Even smaller Housing Associations who, under existing rules, employ apprentices that are currently fully funded, will be required to make a 10% contribution to the costs of their apprenticeship programmes after April 2017.  Although, Housing Associations with less than 50 staff will still have 100% of the funding covered for apprentices aged 16 -18. So the whole sector is likely to be impacted in one way or another.

While this undoubtedly comes at a challenging time for Housing Associations with the welfare reforms and the financial pressures this will bring, it makes it particularly important for all Housing Associations to ensure they consider all the options available to get the most out of the monies they pay into the Levy.  Changes to apprenticeship qualifications make the new Standards (or Trailblazers) more flexible in terms of delivery from the often complex existing Frameworks, which will be phased out by 2020.  Among the two hundred plus new apprenticeships that are available there are 3 new apprenticeships designed specifically for the sector, Housing Property Assistant, Housing/Property Manager and Senior Housing/Property Manager.  All are available for delivery now, and will provide the Skills, Behaviours and Knowledge that staff in these roles require.

A key question to be asking now is, how do we benefit from the Levy and demonstrate a return on investment? In preparing for the Levy, it is important that there is a good understanding of what apprenticeships are all about.  Many employers currently believe apprentices must be new staff, mainly youngsters, in new job roles and primarily in trade occupations.  However, apprenticeship training is available to existing staff of all ages, at all levels and in a wide variety of roles – increasingly at advanced and higher levels including leadership development and professional body qualifications, including an apprenticeship pathway to becoming a Chartered Surveyor. Even those staff with degrees can benefit from apprenticeship training from April 2017.

In our experience, many Housing Associations have a well-planned and funded training programme and there are certainly options to map existing training and also look at co-delivery models, which will allow you to claim back some of your Levy funding in recognition of the training you currently deliver internally.  While this may disrupt current training plans there are added benefits, such as; staff having the opportunity to gain a nationally recognised qualification and employers designing defined career pathways to help retain their most valuable staff. 

A well-planned apprenticeship programme has the ability to identify and address any job/people development gaps and improve the skills of staff both now and into the future.  In particular, many organisations, including Housing Associations, are looking at their Management Development programmes, and considering how these could be mapped to apprenticeship programmes.  Management Apprenticeships exist from Level 3 right through to Chartered Degree level, so almost all levels of management training can be covered.  The emphasis on many of these programmes is not just about upskilling managers in the basic techniques of management, but building strong commercial skills that are increasingly important in the sector, as financial pressures and diversification become more evident.

Another little known fact is that the government will allow employers to spend more than their Levy. The current co-investment is a split of 10% employer, 90% government contribution, which means should you decide to use your existing Learning & Development budget to deliver training via an apprenticeship route, any overspend will be 90% government funded. So, a relatively small contribution of say just £10k, will buy you £100K of apprenticeship training.

The new Standards have been designed by employers and the reforms will continue to improve the quality and perception of apprenticeships and train staff with the skills that employers need.  It will also provide young people with a credible alternative route to higher and professional qualifications, rather than going to university. 

What is the Levy and how will it be collected?

A payroll tax set at 0.5% of the total ‘pay bill’, payable monthly via the PAYE system and reported through normal payroll processes.  The pay bill is broadly based on earnings subject to employers' Class 1 NIC and includes cash-based earnings such as salary, wages, overtime, bonuses, commission, etc.

What is the Levy allowance?

There is an annual Levy allowance of £15k per employer per year which is offset against the Levy payment. This will mean that the Levy is only payable on the annual pay bill over £3 million, which equates to £250k per month. Where two or more companies are connected, only one company can claim the allowance. This allowance will be made on a monthly, cumulative basis.

Apprenticeship funding

Employers who pay the Levy will have access to a Digital Apprenticeship Service account. They will see their Levy payments, plus a 10% top up, appear in their account and will have 24 months to spend those funds on apprenticeship training in England with an approved training provider.

Apprentices must be working towards an approved Apprenticeship Framework or Standard. The training must last at least 12 months and 20% of the apprentice’s time must be spent on off-the-job training.

What you can do to prepare

Further guidance on the Levy is expected shortly. In the meantime, you can take action to prepare for the effect of the Levy by asking the following questions: 

  • What will you pay under the Levy?
  • What strategy will you implement - Ignore, Plan or Overspend?
  • What types and scale of programme will you implement?
  • 16-18-year-old recruitment
  • Training for entry/existing staff
  • Leadership & Management programmes
  • Higher Level/Technical Apprenticeships
  • What is it likely to cost and will the Levy fund it in full?
  • What aspects can be mapped and delivered by your own trainers?
  • Can I get funding back for my own delivery?
  • Are you willing to consider overspending?
  • Management of Levy – what internal resources are required?

CITB and the Apprenticeship Levy

Some Housing Associations with development or construction divisions need to be aware that if they currently pay into the CITB training Levy they will, at least for the first year, be required to pay into both Levies (if they fall into the payroll over £3m category).   CITB has agreed as a temporary measure for organisations paying both levies that they will be able to claim CITB funding at an enhanced rate.  

The Enterprise Bill - Apprenticeship Targets for Public Sector Bodies

The Enterprise Bill is another piece of legislation coming into force in April 2017.  It contains a new requirement for all public sector organisations to employ a minimum of 2.3% of new apprentices each year.

Housing Associations have been classified by the Office of National Statistics as public bodies rather than private sector organisations, however in a publication released in January 2016 there was a statement that said the government ‘do not intend to include Housing Associations within the scope of the Enterprise Bill and it is their intention to take steps to allow them to be reclassified to the private sector for purposes of the Levy’  *Source:  Consultation on Apprenticeship Targets for Public Sector Bodies - Department for Business, Innovation and Skills – January 2016.

Apprenticeship Levy – Housing Specific Qualifications

A number of Housing Associations are looking to use their Levy to map existing in-house training programmes in Customer Service, Leadership and other support roles.  However, a number of Housing Associations, including Aspire, Genesis, Guinness Partnership and Family Mosaic to name just a few, have been involved in the development of 3 Housing Management Standards which have been approved for delivery. These are:

Senior Housing/Property Manager, Level 4

For Senior Managers responsible for the management and delivery of housing related services within their business areas.  The role involves the management of resources with delegated authority to deliver business objectives.    

Housing/Property Manager, Level 3

For Managers in customer facing roles and primarily responsible for the creation and sustainment of successful tenancies.  The role incorporates a degree of lone working with minimum supervision.

Housing/Property Assistant, Level 2

The Housing Assistant role is at entry level and is primarily responsible for administrative work to support Managers. 

On successful completion of the above Apprenticeship Standard and passing an assessment at the end of the programme, all learners will be eligible to apply to join the Chartered Institute of Housing (CIH) at Member level. In addition, those at Level 4 will also qualify for the Professional Diploma route to Chartered Membership.

More details on the above qualifications, along with a full list of Standards ready for delivery, can be found on the gov.uk website.

This article was contributed by Sheila Robbie, Corporate Business Manager at Key Training and John Deaville, Development Director from Key Training.

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