Apprenticeship Scheme 2024 Eligibility and Economic Impact

Summary

The requester sought clarification on the rationale for excluding employers with 10+ FTEs from apprenticeship incentive payments and requested economic impact studies for the construction sector. The authority disclosed that the policy change resulted from a strategic review to target funding for economic impact within existing budgets, noting that 85% of local employers are small businesses, but did not provide specific economic impact studies or risk assessments as requested.

Key Facts

• The Apprenticeship Scheme 2024 restricts incentive payments to employers with fewer than 10 full-time equivalent (FTE) employees.
• The policy change followed a strategic review and public consultation to target funding for maximum economic impact.
• The scheme revision was implemented within the existing cost envelope.
• Approximately 85% of employers on the Isle of Man have fewer than 10 employees.
• Standardised pay rates for eligible small employers were increased by 50%.

Data Disclosed

• 10 full-time equivalent employees
• 85% of employers
• 50% increase in pay rates
• £3 million pay bill threshold (UK Apprenticeship Levy)
• 2021 apprenticeship workshop
• Thursday 15th Feb

Original Request

Dear Sir/Madam, I am requesting information regarding the eligibility criteria for financial assistance under the Apprenticeship Scheme 2024 and the potential economic impact of the scheme's performance in the construction sector on the Isle of Man's economic growth. Request 1: Eligibility Criteria for Apprenticeship Funding The Apprenticeship Scheme 2024 (Section 10) restricts incentive payments to employers with fewer than 10 full-time equivalent (FTE) employees or those in sectors of 'national importance.' In contrast, the Skills Development Scheme 2007 (Section 6.2) does not impose a similar restriction based on employer size. I am seeking clarification on the rationale and decision-making process behind this change in policy. Specifically, please provide: 1- The reasons why companies with 10 or more FTE employees are excluded from receiving incentive payments under the Apprenticeship Scheme 2024, while no such restriction existed in the Skills Development Scheme 2007. 2 -Any documents, reports, or minutes of meetings (including consultations with stakeholders) that discuss or justify the introduction of the 10 FTE employee threshold for eligibility in the Apprenticeship Scheme 2024. 3 - Details of any economic or policy analyses conducted to assess the impact of excluding larger employers (10 or more FTE employees) from receiving financial assistance under the Apprenticeship Scheme 2024. 4 - Information on whether exceptions can be made for larger employers (10 or more FTE employees) in specific circumstances, and if so, the criteria or process for such exceptions. Request 2: Economic Impact of the Apprenticeship Scheme in the Construction Sector The construction sector is highlighted in the Skills Development Scheme 2007 (Appendix II) as a key area for financial assistance, with specific trades such as Plumbing & Heating, Carpentry & Joinery, Painting & Decorating, Electrical Installation, and Brickwork receiving targeted support. Given the importance of this sector, I am requesting information on the potential impact on the Isle of Man's economic growth if the Apprenticeship Scheme 2024 fails to effectively support apprenticeship training in the construction sector. Specifically, please provide: 1 - Any studies, reports, or analyses conducted by the Department of Education, Sport and Culture, or other relevant government bodies, assessing the potential economic consequences (e.g., on GDP, employment, or sector-specific growth) of a failure or underperformance of the Apprenticeship Scheme 2024 in the construction sector. 2 - Details of any risk assessments or contingency plans developed to mitigate the economic impact of insufficient apprenticeship training in the construction sector. 3. Information on how the Department evaluates the success of the Apprenticeship Scheme 2024 in supporting the construction sector, including any key performance indicators or metrics used to measure its contribution to economic growth. 4. Any correspondence, consultations, or stakeholder feedback (e.g., from construction industry representatives or the Isle of Man Construction Federation) regarding the importance of the Apprenticeship Scheme 2024 to the construction sector and its role in supporting the Island's economy. Please provide the requested information in electronic format where possible. If any part of this request is likely to exceed the cost limits under the Freedom of Information Act 2015, please contact me to discuss refining the scope of the request. I look forward to your response within the statutory 20 working days. Thank you for your assistance in this matter.

Data Tables (27)

Full Response Text

On Thursday 15th Feb, attended a meeting of the Business Agency Board with to gather feedback on the draft Skills Strategy. As part of the meeting, the recent announcement about the revisions to the apprenticeship scheme was mentioned. There seemed to be some concern about the decision, within the revised schemes, to remove ‘incentive payments’ for all employers and replace with provision for employers with fewer than 10 full-time equivalent employees to apply for such payments.

A number of relevant points may be worth noting; • Following the strategic review of the scheme (and in line with Island Plan commitment to revise the scheme), it became apparent that a number of improvements were necessary (increasing support for more vulnerable people, targeting funding to areas which would have most economic impact etc); • In reviewing the scheme, the Task and Finish group worked within the existing cost envelope; • While in neighbouring jurisdictions, the costs of ‘out-of-work’ training and assessment are covered, incentive payments’ are not generally available; • The Apprenticeship Levy (a ‘tax’ on companies with a pay bill over £3 million) is applied in the UK and proceeds used to fund apprenticeships. This levy is not applied on the IOM and so such funding is not available here; • Approximately 85% of employers, on the IOM, employ fewer than 10 people. These businesses will continue to be eligible for ‘incentive payments’ and, indeed the amounts of standardised pay rates have been increased by 50%; • The review of the scheme took place following a full public consultation, an apprenticeship workshop arranged by Business Isle of Man in 2021, a series of stakeholder engagement meetings and considerable ‘desktop research’ about schemes in other jurisdictions; • A number of options, including increasing funding for the scheme, were put to (and rejected by) Dept members. Equally, the scheme was considered and agreed by the Skills Board.

• Also, even SMEs have a commitment to 5 per cent co-investment for apprenticeships

Construction IOM Con IOM did contribute to consultation – mentioned that to them Offered A Review in 6-12 months Offered to discuss ‘offline’ Explained ‘National Importance’

‘Incentive’ payments are currently offered to all employers, irrespective, of size.
Remove ‘incentive payments’ for all employers and replace with provision for employers with fewer than 10 full-time equivalent employees to apply for such payments. This would release some funding to accommodate progressive improvements laid out above.

CONFIDENTIAL READING PACK FOR THE MEETING OF THE SKILLS BOARD HELD ON Minute Point 1. Agenda 2. Minutes of the meeting held on Tuesday 27th February 2024 3 3. 4 4. 6.1 5. 6.2 6. Skills IOM Strategy – Milestone Plan 6.3 7. British Chambers of Commerce – LSIPs Evaluation Report https://www.britishchambers.org.uk/wp- content/uploads/2024/02/2024-LSIPs-Evaluation-Report-FINAL27- Feb.pdf - 8. British Chambers of Commerce - Youth Skills Manifesto https://www.britishchambers.org.uk/wp- content/uploads/2024/03/Youth-Skills-Manifesto-FINAL.pdf -

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MINUTES OF THE MEETING OF THE SKILLS BOARD HELD ON TUESDAY 27TH FEBRUARY, 2024 AT 15:30PM AT CHAMBER OF COMMERCE OFFICES AND VIA MICROSOFT TEAMS.

Present: Peter Reid Alex Allinson MHK Daphne Caine MHK

Tim Johnston

Rebecca George Jesamine Kelly (MS Teams)

Independent Chair Minister for Treasury
Minister for Education, Sport and Culture Minister for Enterprise Director of Learning for Work, DESC Director of Policy and Strategy, DfE Head of Locate, DfE CEO, Chamber of Commerce UCM Principal Chamber of Commerce Member & Member of the Board of the Finance Agency

In attendance: (MS Teams)

Note Taker

Apologies: Graham Kinrade

DESC Chief Officer Chamber of Commerce Member

Minute Number

Item Action

[012/24]

[OFFICER INITIALS] [013/24]

2. DESC Officer DESC Officer

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[016/24]

[017/24]

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.

.

Page 5 of 6

Page 6 of 6 [018/24]

[019/24]

Date of next meeting The next meeting of the Skills Board will be held on Tuesday 26th March at 15:30pm.

The meeting closed at 17:30pm …………………………………………………… Peter Reid Independent Chair …………………………………. Date

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The meeting closed at 17.25pm.

……………………………………………………

Peter Reid

    Independent Chair

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Date

Useful Reading and Links

Visit IOM Strategy Document – Not assigned to agenda item https://www.visitisleofman.com/dbimgs/Final%20VES%20Strategy%202022-GD- 0036.pdf.

Visit IOM Skills Survey – Not assigned to agenda item https://www.visitisleofman.com/dbimgs/2023%20Workforce%20Survey%20Results.p df

DESC Essentials for Learning – Agenda Item 5.6 https://e4l.sch.im/pages/index/view/id/1/What%20is%20E4L%3F

Digital IOM – Links Sent from Head of Innovation – Included by Chair for Information – Agenda Item 6.2 Teach children AI from start of secondary school, professional body recommends | BCS House of Lords Committee backs BCS call for reform of computing qualifications for 14-16- year-olds | BCS

Junior Achievement – Just the Job Website – Agenda Item 6.1. https://www.jaiom.im/latest/just-the-job/

From: To: Subject: Changes to Apprenticeships Scheme Hi             Key changes are;-                 No provision to target limited funding to areas which would have most economic impact Offer incentive payment for areas of ‘national importance’, to be determined by the Skills Board           DESC Officer DESC Officer delete it and notify the sender as soon as possible.

Revamped vocational schemes to benefit people, employers and economy Two vocational support schemes have been significantly updated to help individuals develop the skills and knowledge required for a rewarding career.
The Apprenticeship and Vocational Training Assistance (VTA) schemes both support local businesses to develop a future ready workforce for the Isle of Man. The Department of Education, Sport and Culture’s (DESC) has worked alongside the Chamber of Commerce, University College Isle of Man (UCM) and Isle of Man Skills Board to revamp the schemes which will go live on 1 April 2024. Both will offer greater financial help for both people seeking training and employers. They will give greater flexibility for sectors determined to be important in supporting the Island Plan’s commitment to a ‘strong and diverse economy’ and allow targeted supported for those experiencing additional challenges when seeking and sustaining employment. Julie Edge MHK, Minister for Education, Sport and Culture, said: ‘The revamped schemes should have a positive impact on individuals, businesses and the wider economy by providing access to opportunity for aspiring applicants.’ Rebecca George, Chief Executive of the Isle of Man Chamber of Commerce added: ‘Taking action to reduce skills gaps and ensure appropriate skills in the workforce is critical to the growth and diversification of the Manx economy.
‘These two schemes offer vital support for people who are starting their careers and those who are already working and wish to gain industry-recognised qualifications and will, by nurturing talent, make the Island a vibrant place where people choose to live and work.’ The DESC is currently supporting around 550 people with apprenticeships, which involve learning on the job and undertaking supportive studies when necessary. This includes a wide range of sectors from construction to farming. Jesamine Kelly, Principal of UCM said: ‘The update will better enable UCM to target its provision where the economy most needs it, whilst simultaneously ensuring that the qualifications for which people study are academically rigorous.
‘The more targeted support for ‘learning while you earn’ approaches will strengthen the Island workforce and enable meaningful opportunities for learning.’ Application forms and further information can be found on via the following links:

provision for employers with fewer than 10 full-time equivalent employees to apply for such payments.

• The changes that have been made to the scheme mean that, so long as applicants meet the eligibility criteria, DESC will still continue to fund the full cost of courses and assessments (irrespective of the size of an employer). Very little has changed with regard to that. • Following the strategic review of the scheme (and in line with Island Plan commitment to revise the scheme), it became apparent that a number of improvements were necessary (increasing support for more vulnerable people, targeting funding to areas which would have most economic impact etc); • In reviewing the scheme, the Task and Finish group worked within the existing cost envelope. The 23-24 budget for the Apprenticeship Scheme was £724,500 but actual expenditure was £1,167,301; • In researching the impact of proposed changes on employers with more than 10 employees, the cost of ‘incentive payments’ to those with at least 4 apprentices was calculated to be ‘£305,0002.
• While in neighbouring jurisdictions, the costs of ‘out-of-work’ training and assessment are covered, ‘incentive payments’ are not generally available. In England, Scotland and Wales, for example, while employers are supported in meeting the costs of ‘out-of-work’ training and assessment, ‘incentive payments’ (in which employers are given funding for the apprentice not being in work) are not generally available to any employers.3; • The Apprenticeship Levy (a ‘tax’ on companies with a pay bill over £3 million) is applied in the UK and proceeds used to fund apprenticeships. This levy is not applied on the IOM and so such funding is not available here; • Approximately 85% of employers, on the IOM, employ fewer than 10 people4. These businesses will continue to be eligible for ‘incentive payments’ and, indeed the amounts of standardised pay rates have been increased by 50%.

Impact The following table shows the pattern of enrolments for apprenticeship courses, at UCM, over the last three years and for the prospective academic year.

No. of Apprenticeships 21/22 303 22/23 333 23/24 332 24/25 324 (applications)

While it’s too early to fully evaluate the impact of the new schemes, it’s worth noting that the three historical figures are ‘full-year’. Apprenticeships, of course, can begin at any point in the academic year and only about 60% begin in September. This means that 24-25 figure is very likely to increase.

2 See Appendix 2 3 See Appendix 3 4 See Appendix 4 for Development Workers). £8.05 – Development Worker England x √ √ First year apprentices who are under 19 or between 19 and 24 and in their first year receive £5.28. Apprentices who have completed their first year and are over 19 receive the minimum wage for their age (18- 20 - £7.49; 21-22 - £10.18; 23 and over - £10.42). Rates increase nationally. Scotland x √ √ First year apprentices who are under 19 or between 19 and 24 and in their first year receive £5.28. Apprentices who have completed their first year and are over 19 receive the minimum wage for their age (18- 20 - £7.49; 21-22 - £10.18; 23 and over - £10.42). Rates increase nationally. Wales x √ √ If between 16-18 or over 19 in the first year of apprenticeship paid £5.28 per hour (Current minimum hourly rate for apprentices. Otherwise the national minimum wage for relevant age group (16- 17: £5.28, 18-20: £7.49, 21-22 £10.18, 23+ £10.42) Northern Ireland √ √ x Under 19 or aged 19 or over in first year of apprenticeship receive minimum £5.28 an hour. Those aged over 19 receive the relevant minimum wage if they have completed the first year of apprenticeship (20 £7.49, 21-22 £10.18, 23+ £10.42). Jersey x x x Does not appear to be based on age, trainee rate for year 1 is £7.87 per hour and £9.19 for year 2. The minimum wage is £10.50. Guernsey √ √ x The minimum wage (£9.50) is not required for under 18 (who receive £8.60) but it is for the construction and engineering apprentices as they are regulated by Guernsey Building Trades Employer Association (GBTA).

Appendix 4

Sector Small Medium Large Very Large Agriculture, Forestry & Fishing 150 6 0 0 Engineering 52 7 1 1 Manufacturing: Food & Drink 60 31 1 2 Manufacturing 43 12 1 0 Mining & Quarrying 4 2 0 0 Construction 721 64 2 0 Utilities 10 2 0 1 Transport and Communications 94 25 2 1 Wholesale Distribution 33 14 0 0 Retail 291 82 2 4 Banking 2 3 2 4 Insurance 25 12 2 3 Other Finance and Business Services 711 64 2 1 ICT 92 16 0 2 Legal and Accountancy Services 116 22 2 0 Corporate Service Providers 35 41 1 2 Education 23 10 0 2 Medical and Health Service 87 34 4 2 Other Professional Services 404 29 0 0 Tourist Accommodation 41 12 2 0 Catering and Entertainment 153 80 1 0 Egaming 23 9 2 1 Miscellaneous Services 685 61 1 0 Public Administration 16 10 0 2 Total 3,871 648 28 28 Very Large: More than 200 employees Large: 101 to 200 employees Medium: 10 to 100 employees Small: 1 to 9 employees

CONFIDENTIAL

DESC paper no. 149/23

PAPER FOR DEPARTMENT OF EDUCATION, SPORT AND CULTURE SENIOR LEADERSHIP TEAM MEETING

Chief Officer, Department of Education, Sport and Culture Graham Kinrade Responsible DESC Director , Director of Educational Research and Projects Responsible Officer

Minute point to be sent to:

Date of meeting

Title of paper Review of Apprenticeships Scheme Purpose of the Paper:
The objective of this paper is to submit a new proposed scheme to replace the present Skills Development Scheme 2007, following consultation and review, replacing it with a new “Apprenticeship Scheme”. This paper seeks the Department’s approval of the new scheme.

What is the intention of this paper? Seek Approval Please indicate whether the below have been considered. If applicable, please append or detail in paper.

• Legislative Impact Assessment for major primary legislation

• Public Sector Equality Duty1

• Public Sector Climate Change Duty2

• Privacy Impact Assessment (DPIA)

Not applicabl

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