Apprenticeships Levy Consultation response form The department may, in accordance with the Code of Practice on Access to Government Information, make available, on public request, individual responses. The closing date for this consultation is 2 October 2015.

You can also reply to this consultation online at: https://bisgovuk.citizenspace.com/ve/apprenticeshipslevy

Please return completed forms to: [email protected] or: Apprenticeships Levy Consultation Department for Business, Innovation and Skills Spur 2 Level 2 1 Victoria Street London SW1H 0ET

What is your name? Luke Petherbridge What is your e-mail address? [email protected] What is your job title? Public Affairs Manager

When responding please state whether you are responding as an individual or representing the views of an organisation. I am responding as an individual ☐ I am responding on behalf of an organisation ☒ If you are responding on behalf of an organisation, please make it clear who the organisation represents by selecting the appropriate interest group on the consultation form and, where applicable, how the views of members were assembled.

What is the name of your organisation? ABTA – The Travel Association

X

Business representative organisation/trade body Central government Charity or social enterprise Individual Employer (over 250 staff) Employer (50 to 250 staff) Employer (10 to 49 staff) Employer (up to 9 staff) Legal representative Local Government Trade union or staff association Further Education college Private training provider University Professional body Awarding organisation Other (please describe)

Where are you based? England ☐ UK wide ☒

Wales☐

Scotland☐

Northern Ireland☐

If you are responding as an employer, which sector of the economy are you in? Agriculture, forestry & fishing Energy & water Manufacturing Construction Distribution, hotels & restaurants Transport & communication Banking, finance & insurance etc Public admin, education & health X

Other services

Consultation questions Paying the levy 1. Should a proportion of the apprenticeship funding raised from larger companies be used to support apprenticeship training by smaller companies that have not paid the levy?

☐Yes

☐No

Comments: ABTA does not believe that sufficient information has been supplied about how the proposed funding scheme would operate to enable a considered response on this question.

2. Do you have any comments on the proposed mechanism for collecting the levy via PAYE? ☒ Yes

☐ No

Comments: ABTA believes that a more detailed and thorough consultation between the Government and businesses is required to develop a workable system for apprenticeship training that carries the full support of the impacted businesses. While the principle of a digitalised voucher system is welcome, there has been a lack of clarity provided by the Government as to how this would work in practice. For example, ABTA is concerned that the proposed scheme appears to be predicated on the use of external training providers only, whilst details on how this system would operate with in-house training provision has not been provided.

3. In your opinion, how should the size of firm paying the levy be calculated?

Comments: ABTA does not wish to propose a particular definition for determining the size of a larger business. However, we would caution against any definition that uses only the number of employees as the determining factor, as this model takes insufficient account of the requirements of different industry sectors or other factors such as net profitability. For example, we are not convinced that there is a clear justification for large businesses with less labour intensive business models, which often carry higher profit margins, being excluded from funding apprenticeship provision.

4. Should employers be able to spend their apprenticeship funding on training for apprentices that are not their employees? ☒ Yes

☐ No

Comments: The apprenticeship levy should be flexible enough to meet the operational requirements of the businesses concerned. This is vital if the Government’s stated aim of giving control over training provision to employers is to be met. However, it will be important for businesses to be able to justify such expenditure and to demonstrate how decisions to fund external training provide business benefits. ABTA supports the proposal of People 1st that the government should consider working with a sample of businesses to identify potential scenarios where such arrangements might be used, in order to best inform the levy system prior to its implementation.

Employers operating across the UK 5. How should the England operations of employers operating across the UK be identified? Comments: ABTA is concerned that this is an area where it is clear that insufficient thought has been given, and insufficient consultation undertaken, to enable a workable solution to be proposed at this time. The proposal that companies operating across the UK might have to identify their ‘England only’ operations has the potential to create large-scale and unnecessary burdens and red-tape for UK businesses. However, the overriding concern that ABTA would like to stress is that the end result of this England only restriction for businesses must not be that they are unable to recoup the full amount of funding for apprenticeship provision that they have been levied.

Allowing employers to get back more than they put in 6. How long should employers have to use their levy funding before it expires? ☐ 1 year

☐ 2 years ☒ Other (please state in comments below)

Comments: ABTA recognises the need to incentivise businesses to use the funding available, and that an expiry date will likely play a key role in doing so, but it is also important that businesses are enabled sufficient time to adapt to this new system. We believe that a three year timeframe is a reasonable approach, particularly in the early stages of implementation where many businesses will need time to transition their existing apprenticeship arrangements or, in some cases, time to establish new programmes where these have not previously existed. In addition, consideration would need to be given to how this timeframe would work alongside the frequency of levy payments taken from businesses, which has been assumed to be an annual process.

7. Do you have any other view on how this part of the system should work? Comments:

8. Do you agree that there should be a limit on the amount that individual employer’s voucher accounts can be topped up? ☒ Yes

☐ No

Comments: If the system is to be viable, a cap will likely be needed for the amount that individual contributions can be topped-up.

9. How do you think this limit should be calculated?

Comments: It is not possible to answer this question without having more information on the amount of the proposed levy.

10. What should we do to support employers who want to take on more apprentices than their levy funding plus any top ups will pay for? Comments: As mentioned in previous responses, ABTA believes that access to the apprenticeship funding system should be available to all businesses, regardless of whether they contribute to the levy, on a self-funding basis. Therefore funding over and above the level of any levy contribution, including top-ups, should be available through a simple buy-in mechanism similar to that which would be used by non-levy paying businesses.

The levy is fair 11. How can we sure that the levy supports the development of high-quality apprenticeship provision?

Comments: Appropriate management and governance of the apprenticeships system will be vital for ensuring that the funding is being used to provide high-quality apprenticeship training. While the funding element of the scheme is important, it will not be the primary driver in delivering high-quality apprenticeship provision. ABTA supports the comments of People 1st on this response, focusing on the recent Trailblazers approach to apprenticeships, which we believe is intrinsically linked to governance and management: “The trailblazers for retail, hospitality and travel have set out sustainable proposals for sector-led governance of apprenticeships, which they believe should play the leading part on governing the levy to ensure quality outcomes. While the finer detail needs to be agreed by BIS, the employers that have led this process are confident in the principals they have presented. The aim of sector-led governance is a collaborative alliance between all apprenticeship stakeholders to deliver one skills strategy encompassing high quality design and delivery of apprenticeships and the right support to employers that offer them.

The collaboration, including an employer council, a provider reference group and an assessment and quality assurance consortium, propose to work in partnership with government, trade and professional bodies and careers organisations to bring together a streamlined approach that achieves high quality delivery of training and assessment that achieves standardised outcomes (with the assumption that existing quality assurance arrangement will remain: SFA assessment organisation register, training provider register, Ofsted inspections and Ofqual regulation). This combination of these measures will enable employers have control of the cost of apprenticeships but ensure that the system is not abused.”

12. How should these ceilings be set, and reviewed over time? Comments: ABTA believes that the funding ceilings should be reviewed regularly to ensure that it is set correctly, and that it covers all the associated costs of providing apprenticeships.

13. How best can we engage employers in the creation and wider operation of the apprenticeship levy?

Comments: Government should encourage close engagement with lead providers and industry bodies to ensure that apprenticeship provision is meeting the needs of industry, particularly ensuring that apprenticeship provision is adequately addressing skills shortages where these exist.

Giving employers real control 14. Does the potential model enable employers to easily and simply access their funding for apprenticeship training? ☐ Yes

☐ No

Comments: ABTA does not believe that sufficient information has been supplied on the operation of the proposed model to enable an assessment to be made. We are concerned that a number of important elements, including how SMEs could interact with the system, for example, are not covered.

15. Should we maintain the arrangement of having lead providers or should employers have the option to work directly with multiple providers and take this lead role themselves if they choose to do so? ☐ Yes

☐ No

Comments: ABTA favours an approach that enables businesses to provide their apprenticeship training through whichever model best suits the needs of their businesses, whether that is through external providers or in-house. We would be concerned if the Government took action to mandate any one approach.

16. If employers take on the lead role themselves what checks should we build in to the system to give other contributing employers assurance that the levy is being used to deliver high quality legitimate apprenticeship training?

Comments: It is essential that some form of monitoring regime is in place, such as inspections and independent assessment of examinations to ensure quality training provision. The same principles apply regardless of whether the training is in-house or through a provider.

17. Should training providers that can receive levy funding have to be registered and/or be subject to some form of approval or inspection? ☒ Yes

☐ No

Comments: Approval and inspection will be key to ensuring an effective regime.

18. If providers aren’t subject to approval and inspection, what checks should we build in to the system to give contributing employers assurance that the levy is being used to deliver high quality legitimate apprenticeship training? Comments: See above.

19. What other factors should we take into account in order to maximise value for money and prevent abuse? Comments:

The levy is simple 20. How should the new system best support the interests of 16-18 year olds and their employers? Comments: ABTA believes that the government should seek to incentivise businesses to ensure adequate provision for 16-18 year olds by ensuring the additional costs of training and developing this group of individuals are contributed to by Government. We believe the primary mechanism for this funding 16-18 year old training programmes should be the skills budget, however, it might be possible to enable additional resources from the top-up element of the levy to contribute to training provision for this group. It is important, however, to reiterate that while we could support some form of additional payment from top-ups for this group, it is clear to ABTA that provision for 16-18 year olds should not be primarily funded from the levy paid by businesses. In the majority of cases, 16-18 year olds will have specific development needs, often requiring a greater level of attention than general apprentices, and as such this should be recognised by ensuring that the primary funding for such training is allocated from the government’s skills budget.

21. Do you agree that apprenticeship levy funding should only be used to pay for the direct costs of apprenticeship training and assessment? ☐ Yes ☒ No Comments: Businesses must have the flexibility to use their levy funding in whichever way best suits their needs.

22. If not, what else would you want vouchers to be able to be used for and how would spending be controlled or audited to ensure the overall system remains fair? Comments:

23. Are there any other issues we should consider for the design and implementation of the levy that haven’t been covered by the consultation questions we have asked you? ☒ Yes ☐ No Comments: The consultation has raised many questions for ABTA Members, as many important aspects, such as the operational aspects of the funding mechanism and calculations that will determine the rate of the levy, are insufficiently addressed by the consultation document. ABTA believes that the target of the system going live by April 2017 is too ambitious, given the lack of time that has been invested in working with the business community to ensure that the changes are fully understood and bought into by employers. ABTA Members would, therefore, support a delay to current implementation timeline to allow more in-depth consultation to take place.

Do you have any other comments that might aid the consultation process as a whole? Please use this space for any general comments that you may have, comments on the layout of this consultation would also be welcomed.

Comments: While ABTA recognises the Government’s intention to raise the level of core functional skills, such as English and Maths, it does not believe that the levy contributions made by businesses should be used to fund this training. Addressing shortcomings in this area should be the responsibility of broader skills funding. Further, where functional skills are included within apprenticeship training programmes, the appropriate level of these skills should be the decision of the business concerned and not mandated by Government. These decisions will be taken based on each businesses operational needs. It should not be the case that apprenticeship funding can be withheld on the basis of functional Thank for taking the especially time to let where us have your views. concerned We do not might intendfeel to the skillsyou training delivery, the business acknowledge receipt of responses unlessofyou the box below. apprentice capable of individual meeting the requirements the tick intended role. Please acknowledge this reply ☒ At BIS we carry out our research on many different topics and consultations. As your views are valuable to us, would it be okay if we were to contact you again from time to time either for research or to send through consultation documents? ☒ Yes

☐ No