What is the Enterprise Act 2016?
The Enterprise Bill was put before Parliament in September 2015, starting in the House of Lords then passing through the House of Commons, before receiving Royal Assent on 4 May 2016. The main purpose of the Act is to boost British business; Business Secretary Sajid Javid promised that “it is proof that this government is delivering on its commitment to back the business owners who are the real heroes of our economic recovery”.
However, you needn’t be a business owner to have a pivotal role in carrying out the regulations within the Act, or to benefit from its outcomes. In a press release announcing the successful assent of the Bill, Mr Javid assured that “the Enterprise Act will help deliver the growth and security that benefits every single person in the country”.
The Act contains a number of measures which will “give a big boost to British enterprise”, according to business minister Anna Soubry, but the main provisions affecting schools and academies are those intended to “protect and strengthen the apprenticeship brand”.
The Enterprise Act amends the Apprenticeships, Skills, Children and Learning Act 2009 in such a way that gives the Secretary of State the authority to set targets for the number of apprentices employed by public sector bodies, such as schools and academies, and includes the ‘Public Bodies Duty’, which requires the aforementioned bodies to have regard to those targets.
What does it require of schools and academies?
While the specificities of the target numbers are yet to be confirmed in further legislation, a consultation document on the apprenticeship targets, released in January 2016, laid out the provisional expectations of schools as follows:
“The public sector will need to achieve approximately 97,000 apprenticeship starts annually, which is equivalent to 2.3 percent of the total public sector workforce.
“Schools which are maintained by a LA and where the LA is also the employer are expected to be included in their own local government target.
“Other schools such as free schools, foundation schools, voluntary-aided, and academies/trusts with 250 or more headcount will be covered by the [Public Bodies Duty]. This will exempt many schools (due to small headcounts) but some larger schools or multi-academy trusts…will be covered by the duty.”
This translates to a requirement for schools and academies to either employ a local government target number of apprentices, or, if they have 250 or more employees, employ a number of apprentices that equates to 2.3 percent of their workforce.
For a school with 250 employees, this would work out to six apprentices each year, for every year that its workforce remains at 250 employees. Should its workforce rise to 400, it would have to hire nine apprentices each year in order to meet the target.
How could this affect schools and academies?
Government guidance dictates that apprentices must work more than 16 paid hours per week, although most usually work for at least 30, and must be paid at least the national minimum wage rate. Employers must also offer the same conditions to apprentices as to other employees, such as sick pay and holiday pay.
While apprenticeships already have an established place in the school workforce, union heads have expressed concern that the new government target could apply financial pressure to many schools, even those exempt due to employee headcounts below 250; although small schools should not be affected by the percentage target, some could potentially find themselves having to deliver numbers for over-arching academy trusts. In the consultation document, the government expressed that smaller public bodies will still be encouraged to “deliver apprenticeship growth as part of [their] wider growth strategy”.
Current government guidelines indicate that organisations with less than 50 employees in total can apply for a £1,500 apprenticeship grant for up to five apprentices, if the apprentice is between the ages of 16 and 24, and the government covers 100 percent of apprenticeship training costs; however, questions about whether this arrangement will be affected by the introduction of the ‘apprenticeship levy’ remain unanswered.
From April 2017, employers with a pay bill in excess of £3 million will be required to pay 0.5 percent of their pay bill into an apprenticeship levy, which exists to “help fund growth in quantity and quality of apprenticeships”, and the employers will receive £15,000 to offset against the payment. The government consultation ensures that this levy applies to less than 2 percent of UK employers; however, the government are yet to confirm whether smaller organisations will need to pay into the levy to reap the funding benefits.
General Secretary of the National Association of Head Teachers, Russell Hobby, believes that the 2.3 percent target “may be unrealistic in the current climate, as budget constraints mean many schools are cutting non-teaching roles”.
Head of Education at Unison, Jon Richards, warned that “with increased pressure on finance and with increased expectations on school business managers, [Unison] would have huge concerns about job substitution”.
When contacted by a researcher from TheSchoolBus, the National Apprenticeship Service confirmed that the proposed public sector targets will be reviewed in June 2016.
With the specific rules and requirements, as yet, unrefined, the legislation to follow, solidifying the apprenticeship targets, could change any pressures facing schools, as could the ruling on whether small organisations may receive funding from the apprenticeship levy. So, for now, schools and academies are left in limbo, awaiting clarification, before we can really begin to understand and assess the ramifications of the apprenticeship targets.
DfE and DBIS (2016) ‘Consultation on apprenticeship targets for public sector bodies’, pg. 10
Freddie Whittaker (2016) ‘New apprentice rules will squeeze school finances’, <http://schoolsweek.co.uk/schools-forced-to-take-on-apprentices/> [Accessed: 16 May 2016]
GOV.UK (2016) ‘Employ an apprentice’ <https://www.gov.uk/take-on-an-apprentice/overview> [Accessed: 16 May 2016]
GOV.UK (2016) ‘Enterprise Act becomes law’, <https://www.gov.uk/government/news/enterprise-act-becomes-law> [Accessed: 16 May 2016]
National Apprenticeship Service (2016) (Telephone conversation on the apprentice target for academies) [Personal communication: 16 May 2016]