Consultation on the Scottish Governement Response to the UK Apprenticeship Levy

The Apprenticeship Levy

16. In July 2015 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. Those with an annual paybill of £3m or less will be exempt. The Levy will apply to employers in the public, private and third sectors.

17. The UK Government will use the funding generated through the Levy to support its commitment to deliver its ambitions for apprenticeships in England during the lifetime of the current UK Parliament and to allocate a share to each of the Devolved Administrations through existing Barnett arrangements.

18. Training levies and their collection are a matter reserved to the UK Government. However skills policy including responsibility for apprenticeships is a fully devolved matter.

19. Since the announcement the Scottish Government has been involved in discussions with HM Treasury on Scotland's share of the funding. Discussions on the exact implications for the Scottish budget are ongoing. Once this is finalised it will be for Scottish Ministers to develop proposals on how Scotland share of the levy will be allocated when setting future Scottish Budgets.

20. The introduction of the Apprenticeship Levy comes at a time when the Scottish Government policy on Modern Apprenticeships has been set as part of the 7 year implementation of the Youth Employment Strategy Developing the Young Workforce.

21. Alongside the introduction of the Levy the UK Government is also overhauling the development and delivery of apprenticeships in England. While this is very much the responsibility of the UK Government, the Scottish Government has been engaging with the Department for Business, Innovation & Skills to understand the planned changes and to ensure that cross UK issues are fully considered.

22. This work will continue in relation to issues which will have an impact across the UK including the future of existing levies, such as that which funds the Construction Industry Training Board, and the infrastructure which supports the development of apprenticeship frameworks.

23. The Scottish Government is keen to work with employers to shape our response to the introduction of the Levy Ministers to support employers to recruit more apprentices and support wider workforce skills development. Officials have already been involved in discussions with a range of employers and other stakeholders. That engagement has helped shape early thinking on how Levy funding might be used to support our Modern Apprenticeship and wider skills ambitions.

24. This consultation is designed to test more widely the ideas developed to date with employers.

Scottish Government Modern Apprenticeship Policy

25. While the Scottish Government is committed to growing, widening and enhancing Scotland's Modern Apprenticeship programme, we do not believe there is the need for a fundamental shift at this stage in the mechanisms for apprenticeship delivery in Scotland. This allows a flexible approach to delivery by private and third sector training providers; colleges; industry groups and employers.

26. The success of the Modern Apprenticeship programme can be seen in the ongoing commitment from employers. This reflects the benefits of the programme to employers in supporting the skills development of their workforce and in bringing new talent into that workforce. In 2015/16, 25,818 new Modern Apprentices commenced their training across a wide range of sectors of the Scottish labour market.

27. In line with the recommendations of the Commission for Developing Scotland's Young Workforce and the Youth Employment Strategy, the Scottish Government has committed to ambitious significant further development of the Modern Apprenticeship programme. The Youth Employment Strategy is focussed on providing a wider range of vocational education opportunities starting in school with enhanced employer involvement. The overall aim of the programme is to see a 40 per cent reduction in youth unemployment by 2021.

28. Modern Apprenticeships are a central part of the Strategy. The Government is committed to increase the number of new Modern Apprenticeship opportunities to 30,000 a year by 2020, with growth focussed on higher level apprenticeships, particularly in Science Technology Engineering & Mathematics frameworks, and an on-going focus on opportunities for young people.

29. The strategy sets out how we will seek to widen the programme by addressing under representation among young disabled people, young people from minority ethnic backgrounds and care leavers as well as addressing gender segregation within the programme. This focus on inclusion is designed to widen the talent pool at the disposal of employers, supporting them to harness all of the talents available to them. There is also a commitment to support more small businesses to offer Modern Apprenticeships.

30. The strategy also sets out how we plan to enhance the programme by offering earlier opportunities for pupils in the senior phase to begin apprenticeship training while still at school through the introduction of Foundation Apprenticeships and to introduce Graduate Level Apprenticeships in partnership with employers and universities. (An explanation of both Foundation and Graduate level apprenticeships is set out later in the document.)

31. The development of the programme will be informed by senior and wide ranging employer leadership through the recently established Scottish Apprenticeship Advisory Board and employer input from the Developing the Young Workforce ( DYW) programme through the DYW Programme Board and the emerging network of DYW Regional Groups.

32. Originating from the recommendations of the Commission for Developing Scotland's Young Workforce, the Scottish Apprenticeship Advisory Board provides employer leadership and contributes to the development of apprenticeships in Scotland; ensuring they are aligned with industry and economic need, fair work and job opportunities. It is responsible for providing advice and guidance and making recommendations on the guiding principles, operational policy, systems and structures supporting apprenticeships in Scotland.

33. The Scottish Apprenticeship Advisory Board structure includes an Employer Engagement Group, of which employer and business organisations are members. This group has a specific role to listen, engage, communicate and distil information from employers on matters affecting apprenticeships in Scotland and will therefore play an important role in supporting the consultation process.

34. Parallel to the establishment of the Scottish Apprenticeship Advisory Board is the emergence of the network of industry led DYW Regional Groups. These bring together employers and the region's education community to encourage and support more employers to engage with schools and colleges and to recruit more young people including Modern Apprentices.