UK L&D is about to be hit with a big hit on their budget. Are you prepared?

L&D will soon be faced with a jolt to their system. A LEVY will be taken, by law, from their coffers. How many have planned for this even is anybody’s guess but here’s a few questions you need to be able to answer.

What is the levy?

A compulsory payment of 0.5% of payroll. It is expected to raise £3 billion annually. . This was a manifesto promise to create 3 million apprenticeships by 2010.

Who has to pay?

Organisations with a payroll greater than £3 million have to pay and that’s about 14,000 employers. There is an offset against payroll of £15,000 so ((roughly) organisations with more than 108 employees, earning the national average salary (£27,600), will have to pay the levy. For some this is thousands, others millions. It is likely that SMEs will benefit in that they will still receive funds for apprenticeships, even though they will not have to pay the levy.

What can you do?

There will be a voucher system, designed to track what you can draw down to pay a training provider.  This is a flip from the traditional paymaster (Skills Funding Agency) to employers, so you have choices.

What about Scotland, Wales and NI?

A proportional portion of the budget will be calculated (most likely on the Barnett formula) for these countries.

How long do you have to plan for this event?

You have 14 months to get your plan in place as it starts April 2017. You need to know where the money is coming from and what role you want to play in the execution of its spend.

Conclusion

This will happen folks and many already have formed alliances, pooled resources and know what they are doing. Others are in the planning stage. But many haven’t a scoobie about what’s happening, its implications and have done no planning at all. The danger here, if you have not planned for this event, is that you will lose out in favour of those who have plans in place.

BIS Guidelines here.