5 Levy Employer Observations in 2018 so far by Peter Marples

Peter Marples, Group Chief Operating Officer at 3aaa Apprenticeships has notice five common observations from talking to his Levy clients over the past 2 months and here is what he is hearing:

1) Losing our funds

Many clients have yet to really pick up the pace with the levy and their plans. The teams at 3aaa Apprenticeships have been modelling financial projections for clients based on existing spend and what is clear is that if employers have spent less than 50% of their pot so far, without a concerted increase in activity by April, they will be facing repayments of levy contributions in 2019.

“So, don’t say we haven’t warned you of the consequences of not planning!”

2) Accounting for levy underspends – tips for PLCs

With significant levy funds remaining underspent, the question recently posed was ‘how do I account for this in my accounts?’

Whilst 3aaa Apprenticeship are not advocating any approach, after all we are not your auditors, there is a legitimate argument to treat the underspend as a prepayment and thus add it back to profits.

That could be a significant bonus to those organisations in need of profits to hit forecasts previously reported to the City. But companies can only do this if they have a clearly articulated plan on how they are going to utilise the underspend. This is where we can help, by supporting you in producing the plan and forecasting spend for 2018/19.

At a macro level, and with £1.5bn of potential underspent levy funds in 2018, UK business and the Public Sector could be reporting a bolstering of profits by this amount – and for those profitable, a further tax yield for HMRC through more corporation tax payments. Well that is a stroke of genius!

3) New Market Entrants

We are already starting to see new providers who entered the market some 12 months ago on the back of the levy opportunity, going out of business or struggling significantly with the demands the levy brings.

Some of these companies have won quite sizeable clients on the basis of the offer of service provision that cannot be delivered. 3aaa Apprenticeships are tendering and being successful for many contracts across a wide range of sectors and industries, but it surprises us that very little questioning arises about an organisation’s capacity to deliver what are significant contracts – so ask the questions and don’t be faced with appointing a contractor who may not be here in six months’ time.

4) 20% off the Job

A burning topic with every client. It doesn’t mean day release, nor does it mean no teaching and learning through web chat and wholly distance learning. The answer is quality teaching and learning, upskilling of candidate’s knowledge and application of that knowledge to benefit themselves and their employers. Keep that in mind when embarking on any programme with a provider. But teaching and learning is a core part of any Apprenticeship programme!

5) Square Pegs in Round Holes

As we see yet more standards being released into the market, the headlines in the decline in Apprenticeship starts and rumblings of the levy not being flexible enough for employers – it is time to reflect that the levy is not the solution to every L&D issue, indeed Apprenticeships might not just fit with the needs of the business.

We, at 3aaa Apprenticeships, are very clear that using the levy must be right for your business and we are here to discuss the alternatives such as Bite sized technical training – is it really best use of your levy to deliver 1 year training programmes when you want to upskill your staff, say in a retail environment with some bite sized technical skills ? – not only is it an expensive solution, much more visible now you know the cost of the training but may not deliver what you want – we are working with one client to deliver what were existing Apprenticeship programmes costing £1m of levy funds per annum into a commercial programme costing less than £100,000, freeing up 90% of their levy pot for other things!