Publication - Consultation responses

Consultation on the Scottish Governement Response to the UK Apprenticeship Levy

Published: 13 Jul 2016

The UK Government announced its plans to introduce a UK wide Apprenticeship Levy from April 2017. Employers will pay 0.5% of their annual pay bill in excess of £3m through the PAYE system. It will be for Scottish Ministers to decide how Scotland's share

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20 page PDF

262.6 kB

Consultation on the Scottish Governement Response to the UK Apprenticeship Levy
Options for the Future

20 page PDF

262.6 kB

Options for the Future

35. From engagement with employers to date it is apparent that while they see great value in Modern Apprenticeships, they do not see them as the only way to meet their skills needs. Nor is there evidence that Levy paying employers will be able to absorb the numbers of apprentices into their businesses required to recover their full Levy contribution.

36. The Scottish Government is therefore keen to explore a wider set of options to use Levy funding to benefit employers and support our economic ambitions while supporting the delivery and quality of the Modern Apprenticeship programme for the benefit of Levy paying employers and of smaller employers. The approach outlined in this consultation document covers four distinct elements which you are invited to share your views.

Element 1 - Maintain the current Modern Apprenticeship growth ambition and commit to industry that we would fund further expansion should there be demand.

37. The Scottish Government remains committed to delivering at least 30,000 Modern Apprenticeship starts each year from 2020. We believe that this remains the appropriate level of expansion to protect the quality of the apprenticeships on offer, both for Modern Apprentices and for employers.

38. Discussions with employers to date have indicated that there is a general view that while the introduction of the Apprenticeship Levy will potentially increase interest in the recruitment of Modern Apprenticeships among Levy paying employers, they will generally not be in a position to offer a sufficient number of Modern Apprenticeships to recover their full Levy contribution.

39. Levy paying employers comprise no more than 2 per cent of all employers in Scotland. The majority of employers who currently recruit apprentices fall below the Levy threshold. Many of these employers are part of the supply chain for Levy paying employers.

40. There was an acceptance among the employers we have spoken to that investment of Levy funding in Modern Apprenticeships directed toward smaller employers will benefit Levy paying employers in terms of developing skills among their supply chain and more generally within the economy. The Scottish Government therefore remains committed to supporting both Levy paying employers and smaller employers able to offer Modern Apprenticeship opportunities.

41. The introduction of the Apprenticeship Levy will potentially encourage employers to recruit more Modern Apprentices. In recognition of this, we think it is appropriate to offer employers the opportunity to provide more than the 30,000 opportunities that we have already committed to if there is sufficient industry demand. The overall level of this would need to be agreed, with the quality of Modern Apprenticeships at the heart of any further expansion.

Should the Government's commitment to 30,000 Modern Apprenticeships starts a year by 2020;

a) be maintained
b) be increased?

Element 2 - Graduate Level Apprenticeships

42. Within the overall plans to grow the Modern Apprenticeship programme is a commitment to develop Graduate Level Apprenticeships. These would provide work-based learning opportunities up to Masters degree level for employees. They are being created in partnership with industry and the further and higher education sector. These apprenticeships combine academic knowledge with workplace focussed skills development to enable participants to become more effective and productive in the workplace at an earlier stage.

43. Graduate Level Apprenticeships provide an opportunity to develop a new way into degree-level study for individuals who are currently employed, or who want to go straight into work. Apprentices can progress to the highest level of professional qualifications with a range of entry and exit points from a Higher National Diploma (Scottish Credit and Qualifications Framework level 8) to a Master's degree (Scottish Credit and Qualifications Framework level 11).

44. By investing in staff through Graduate Level Apprenticeships, employers can enhance the higher level skills of their workforce and support their staff to develop their skills to industry and professional standards. Graduate Level Apprenticeship designed around the needs of industry will provide employers with confidence that the learning at college or university will directly contribute to the success of the business.

45. The first Graduate Level Apprenticeships will begin in 2016 with an initial focus on ICT/Digital, Civil Engineering and Engineering. As they develop it is expected that the programme to extend to a range of additional industry sectors.

Q2. Should Apprenticeship Levy funding support growth in the number of Graduate Level Apprenticeships in Scotland?

a) Yes
b) No

Element 3 -Development of a flexible skills fund for wider workforce development

46. Employers have indicated that they would welcome a wider use of Levy funding for workforce development training opportunities beyond apprenticeships. This was something which was a particular focus in relation to addressing skills gaps and meeting the skills needs of older employees for whom a full apprenticeship would not be appropriate. While the Modern Apprenticeship programme allows some scope for those aged 25 and over to participate in the programme, the focus of the planned expansion is on those aged under 25.

47. Our discussions with employers have indicated that using Levy funding to support a new flexible skills fund for employers to train existing employees would be welcomed. Quality and positive impact on productivity would be central to the fund, with training restricted to qualifications benchmarked against appropriate levels of the Scottish Credit and Qualifications Framework (potentially level 6 and above).

48. The Scottish Government is interested in the idea of a new flexible skills funding stream to support wider workforce development. Aligning this with areas of known current and future skills shortage such as ICT and digital, logistics and distribution, the future demands of the transition to the green economy and areas of construction will be important. This would be developed in partnership with industry and would be aligned with economic growth and fair work ambitions.

49. Such a proposal would need further work within the Government's forthcoming budget process but we would welcome feedback from employers on the value of this approach.

Q3. Should Apprenticeship Levy funding be used to establish a flexible skills fund to support wider workforce development?

a) Yes
b) No

Element 4 - Pre-Employment Support

50. As part of Developing the Young Workforce Programme Skills Development Scotland, colleges and schools are working together to offer opportunities to young people to participate in Foundation Apprenticeship opportunities within the senior phase of school. These are designed to help young people gain valuable, real-world work experience and access work-based learning while they're still at school. By giving young people earlier exposure to the world of work, they have the opportunity to develop the skills, experience and knowledge they'll need when they leave school including preparation for a full Modern Apprenticeship.

51. For young people Foundation Apprenticeships provide the chance to get a head start on their careers by gaining an industry-recognised qualification, work on real projects and broaden their career options when they leave school. They also provide much better practical understanding of the Modern Apprenticeship pathway open to young people after they leave school.

52. For employers, the emergence of Foundation Apprenticeships provide an opportunity to attract highly motivated and committed young people who are willing to learn, identify young people who are right for their business and contribute to ensuring their organisation has people with the skills they need.

53. Funding is in place to support the development and expansion of Foundation Apprenticeships until 2018. In the longer term there is an opportunity to consider whether or not Foundation Apprenticeships should be supported by Levy contributions.

Q4. Should Apprenticeship Levy funding be used to support the expansion of Foundation Apprenticeships?

a) Yes
b) No

54. From 1st April 2017, employment support services in Scotland will change. New powers to provide employment support for disabled people and those at risk of long term unemployment will be devolved to Scotland.

55. The Scottish Government aims to use these powers to better align employability support in Scotland, helping unemployed Scots find sustainable and fair work, and focusing on those who need most help to reduce inequality. This is also an opportunity to deliver the support unemployed people need to find - and to stay in - work and helping employers to find, employ, and retain the people they need to help them compete successfully and grow their business.

56. The devolution of contracted employment support will build on existing SG services, not only to help people find and stay in work, but to develop the skills of our workforce to ensure that employability support is firmly aligned with the needs of the Scottish labour market. In this way, we can ensure that individuals are supported in finding employment opportunities, but also that businesses can find the employees they need to grow and to succeed.

57. Meeting the recruitment needs of Scotland's employers means doing all we can to help unemployed Scots into work. It means working to remove barriers for groups who face particular challenges finding jobs, and enabling people to participate fully in the labour market. To deliver this, in the first delivery stage, Scottish Ministers have agreed to allocate up to an additional £20m in 2017-18 over and above the initial £7m funding being transferred to the Scottish Government for the delivery of newly devolved employment services.

58. To match employer needs to with support for people seeking work, funding from the Apprenticeship Levy would provide an opportunity to enhance the support on offer, and align with employer needs. The aim is to create employability services in Scotland that reflects the workforce, that meets industry and sector needs that helps grow national and local economies and that builds on the existing delivery landscape.

59. Devolved powers are a springboard for greater efficiency, alignment and integration of employability support. Devolved powers are also an opportunity to build the employability skills of unemployed people, and to match the employment needs of employers in Scotland, with those seeking employment.

Q5. Should Apprenticeship Levy funding be used to help unemployed people move into employment, and to help meet the workforce development needs of employers?

a) Yes
b) No

Additional Suggestions

60. The Scottish Government would welcome your views on additional suggestions on how Levy funding might be used to develop skills.

Q6. Are there any additional suggestions on how Apprenticeship Levy funding might be used?