An apprenticeship levy will be introduced in April 2017. Vanessa Kingsley and Tony Allen, specialists in pharmacy training and apprenticeship skills, outline why this could be an opportunity for community pharmacy owners. 

What is the apprenticeship levy, and what does it replace?

The apprenticeship levy represents a new way of funding apprenticeship training in the UK, and marks a significant departure from the existing system. 

In pharmacy, with some exceptions, funding for an apprentice is currently only readily available for the two pharmacy apprenticeship frameworks: the level 2 certificate in Pharmacy Service Skills (dispensing assistant training), and the level 3 diploma in Pharmacy Service Skills (pre-registration technician training).

Currently, employers contribute towards the costs of training programmes directly to their chosen training provider. The contribution the government makes is related to the size of the employer – it contributes less for employers with over 1,000 employees, and so these employers have been charged a higher fee towards training.

How will the new apprenticeship levy work?

Regardless of your pharmacy’s size, the apprenticeship levy has been set at 0.5% of an employer’s total annual UK payroll. Employers will, however, receive an annual allowance of £15,000 to offset the levy, which is why in practice the levy will only be paid by those businesses with payrolls of more than £3 million per year.

What do smaller independents need to know?

While the levy will affect larger organisations most significantly, it will change how smaller businesses access apprenticeship funding. Currently, the majority of the apprentices we deal with come from organisations that will not meet the levy threshold.

For the majority of non-levy paying pharmacies – for example, small independent pharmacies – there will still be support from the government for apprentice training. Under the new proposals, these businesses will be required to contribute 10% towards the cost of funding an apprenticeship, with the government picking up the tab for the remaining 90%.

How can pharmacies access the training funds?

Pharmacy owners in England will be able to access the funds they have paid into the levy via a new online portal called the Digital Apprenticeship Service. You can now register online and use the service to find accredited training providers and assessment organisations, pay for training and assessment, and find external candidates who are seeking apprenticeship training.

Contractors will be responsible for choosing training providers and negotiating (within a pre-set funding band) the cost of the training, including any end-point assessment with them.

Pharmacies in Wales, Scotland and Northern Ireland will receive a share of the expected apprenticeship levy when the data becomes available. The devolved administrations will decide how the money will be allocated, assuming they do not reject the deal altogether.

What about the larger pharmacies?

For pharmacies with a payroll of more than £3 million – likely to be the mid-size multiples upwards – there is no escaping the costs of the levy. There is no opt-out and the levy is even payable by the public sector, including the NHS.

Howevere, employers who must pay the levy will still receive a 10% top-up from the government to their total monthly contributions in England. So, for every £1 an employer pays in, it can draw out £1.10 to spend on apprenticeship training and assessment.

Should the sector be concerned about the levy?

Due to the size of its workforce, the pharmacy sector’s levy bill will be sizeable – the introduction of the levy will cost pharmacies in the UK an estimated £25 million annually in total. 

Many organisations are concerned about the financial implications that this new levy will have. It comes at a time when pharmacies are still dealing with the implications of the National Living Wage, and it is another business cost for those with small margins.

Ultimately, community pharmacy should not just write off the levy as an employment tax. Pharmacies should investigate how an apprenticeship programme may work for them, and how it might fit with their existing recruitment and training strategies.

Vanessa Kingsbury is managing director of Buttercups Training, and Tony Allen is chief executive of apprenticeship and skills consultants AAS.

The C+D Awards 2017 for training and development is open for entries. Find out more about how to enter this category here.