Monday 5th February 2018

5 Observations from our client’s Reflections in 2018 so far

Well, we have already seen the back of Dry January and soon the clocks will be springing forward. It has been a hectic first month for everyone at 3aaa in the levy space and promises to be an exciting and rewarding 2018. So what are we seeing and what can we expect in 2018:

1)            Losing your funds

Many clients have yet to really pick up the pace with the levy and your plans. Our teams have been modelling financial projections for clients based on existing spend and what is clear is that if you have spent less than 50% of your pot so far, without a concerted increase in activity by April, you will be facing repayments of levy contributions in 2019. So don’t say we haven’t warned you of the consequences of not planning – I saw one tender only this morning of a public-sector body who is expecting to start spending their £6m levy in October 2018 – yes 2018!

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 we 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 you can only do this if you have a clearly articulated plan on how you are going to utilise the underspend. This is where we can help in taking by supporting you in producing the plan and forecasting your 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. We 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 are very clear that using the levy must be right for you 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!

If you are interested in discussing any of the above issues with me or simply want to chat, give me a call on 07979 857438.

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