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Apprenticeship levy survey

Creative Skillset and Creative & Cultural Skills (the UK skills body for arts and culture) are conducting a survey on behalf of the creative industries. The purpose of this is to develop the evidence base that would be needed to underpin any business case to the government for changes to the apprenticeship rules that could make the apprenticeship system work more effectively for the creative industries.

It is important that we hear the views of the industry as a whole. The survey is open to any employer, whether or not they currently pay the apprenticeship levy. 

The Creative Industries Federation (the membership body for the creative industries) along with other creative industries organisations including UK Music, the Crafts and Design Councils and the Society of London Theatres plus UK Theatre will support both skills councils in analysing the survey outcome and championing its recommendations. 

Creative industries employers have been telling us that the current apprenticeship rules don’t work for them because of the particular nature of their businesses. But, to persuade the government to change those rules, we need to have firm evidence and to build a robust business case to demonstrate that the changes we might propose would have a positive impact. This questionnaire is the first step in gathering that evidence that could lead into that business case. We are not pre-judging what the evidence will tell us or whether or not a business case would stand up to scrutiny.

The context

The government has reformed the apprenticeship system:

  • Introducing the mandatory apprenticeship levy for employers with annual wage bill of over £3m. Employers in this category pay 0.5% of the amount above the £3m (so an employer with a pay bill of £4m would pay 0.5% x £1m = £5k).
  • Those levy payers can then use the money they have paid into the levy to pay for the training element of the cost of an apprentice – typically the cost of sending them to college or private sector training provider (apprentice wages cannot be paid from levy funds). So the full cost of the college / other training provider costs can be covered by levy funds within certain maximums (more on that below).
  • For employers with an annual wage bill of less than £3m, at least 90% of the cost of the college / other training provider cost is covered by the Government and you have to pay the remaining 10%. This is also subject to certain maximums as, explained below.
  • All new apprenticeships have to be delivered against a formal ‘standard’, supported by at least ten employers and approved by the Institute for Apprenticeships (IfA). Each standard is placed in a set funding band, intended to reflect the associated training costs. The funding band sets the maximum training cost that can be covered referred to above.

Issues for the creative industries

Apprenticeship levy payments from the creative industries are forecast to raise up to £75 million p.a.. However, at present, the available evidence suggests there is little prospect of the industry being able to spend anything like that amount on apprenticeships.

The larger companies that pay the levy often don’t have the headcount which would allow them to recruit apprentices in the numbers they would need to in order to recoup their levy payments. Furthermore, they often struggle to meet the 12 month contract rule because, in filmmaking for example, the production is managed via a special purpose vehicle which is not normally engaged in constant production over a full 12 months.

And most creative industry companies are small - 95% of UK creative businesses employ ten or fewer people (source: DCMS Sectors Economic Estimates, DCMS 2016). Companies of that size who work mainly on short-term projects often say that they can’t afford to meet some of the apprenticeship rules, particularly the requirement for a minimum 12 month contract and 20% off the job learning. The protections that those rules provide to apprentices are important but we need to avoid imposing requirements on small companies who can’t meet those requirements. 

It may be that additional flexibilities in the rules could have a positive impact (more employers recruiting more apprentices) but we need the evidence that the benefits would indeed occur.

Changes to the rules

A potential change to the current rules, within government policy, would be to enable levy-paying companies to transfer more than the current limit of 10% of their levy to other organisations, most likely to an Apprentice Training Agency (ATA).  We need to explore whether, in practice, this would have a positive impact.

ATAs are designed to support employers who wish to take on an apprentice but are unable to for reasons of headcount restriction or the requirement to offer a minimum 12 month contract and allow the apprentice to do 20% off the job learning, or other reasons.

In the ATA model, it is the ATA who acts as the apprentice employer and who places them with a host employer. The host employer pays the ATA a fee for the apprentices’ services. This fee is based on the wage agreed with the host and the ATA management fee.

The ATA model can also offer other benefits for the employer, including:

  • Support with recruitment – finding the right apprentice to meet the employers’ needs
  • Responsibility for wages, tax, National Insurance as well as administration and performance management
  • Supervision of the apprentice during the apprenticeship period
  • Links with an approved training provider and support to both the apprentice and host employer throughout the apprenticeship.

Conclusion

We urge as many employers as possible (both levy payers and non-levy payers) to answer this questionnaire, so that we can determine whether or not the evidence would support a sound business case to the government for the change above.

The survey can be accessed here and the deadline for responses is Friday 24 August.

Please address any queries to our Head of Policy Mark Heholt.

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