For many nurseries finances are tight, but that doesn’t mean training has to be put on the back burner. The Childcare Company explains how settings can actually save money through engaging with apprenticeship programmes

Hikes in National Insurance rates from April this year, increases in the National Living Wage and new statutory guidance on additional charges have left many nursery owners and managers in a financial quandary.

However, apprenticeships can offer a solution which nurseries might not even have realised was there. By engaging with apprenticeship programmes, settings can save tens of thousands of pounds in recruitment, training and National Insurance contributions.

Cut employment costs: Zero National Insurance for under-25s on an apprenticeship

From April this year, two things are going to happen regarding National Insurance (NI) contributions. First, employer NI contributions are set to increase from 13.8%, to 15%. Second, the per-employee threshold above which an employer has to start paying NI will reduce from £9,100 to £5,000 per year.

However, businesses do not need to pay any Employer National Insurance contributions for apprentices under the age of 25 on annual earnings of up to £50,270. Developing a training strategy that places as many of your staff members onto apprenticeship programmes as possible will help a nursery offset the upcoming NI and Living Wage increases and free up additional funds that can be invested in other areas of the business.

This is not just a strategy for entry-level staff. In addition to the Level 2 early years practitioner, Level 3 early years educator and Level 5 early years lead practitioner there are numerous other apprenticeships covering specialisms such as leadership and management, special educational needs, human resources, chef, and many others.

The Childcare Company has a calculator on its website which allows an employer to calculate exactly how much they could save by entering a staff member’s annual wage. Savings average at around £3,000 per apprentice.

Claim back money you have already paid

Nurseries might be unaware that if they have already paid National Insurance contributions for apprentices from 2016 onwards, they can claim this money back. Ali Franklin, client partnership manager at The Childcare Company, worked closely with Natasha Kirby, director at Boys and Girls nurseries in South Hertfordshire and North London. Franklin was able to guide and signpost Kirby to claim back £27, 513 from His Majesty’s Revenue and Customs (HMRC) for apprentices on payroll dating back to 2016 who were eligible for National Insurance savings.

Bonus funding

A nursery can obtain £1,000 to support an apprentice in the workplace if, at the start of their apprenticeship training, they are one of the following:

• 16 to 18 years old (or 15 years old if the apprentice’s 16th birthday is between the last Friday of June and 31 August).

• 19 to 24 years old with an education, health and care (EHC) plan.

• 19 to 24 years old and have been in care.

Levy transfer

Apprenticeships are heavily backed by the government, as opposed to other types of training. Businesses with an annual pay bill of less than £3 million are able to access apprenticeships that are 95% funded by the government. Larger businesses (2% of all employers) pay an apprenticeship levy of 0.5% of their pay bill, and this funds their apprenticeships.

Levy-paying employers who can’t make full use of their own levy funds can pledge them to smaller businesses to support them to invest in apprenticeship programmes. Transferring levy funds is a way for large organisations to support other businesses by deciding which sectors, skills or local areas they would like to fund. For example, large levy paying organisations could support nurseries by funding apprenticeships in a local area, or support any apprenticeships in a particular town or city.

The Childcare Company has extensive experience working with large levy-paying organisations, many of whom are its own clients, to facilitate levy transfers to smaller businesses. “Recently, we successfully facilitated two transactions: one for £200,000 and another for £400,000,” says Gareth Reichers, director of growth and partnerships at the provider. “These funds have been used to support apprenticeships in critical sectors we serve. We encourage nurseries to get in touch to see how we can help cover the cost of training via apprenticeships, utilising our extensive network of large levy payers who can offer assistance.”

Some of The Childcare Company’s levy transfer clients include Access Group, Southampton Football Club and Essex County Council.

• Gloucester NHS transferred levy funds to Kate Consultancy, a residential children’s home.

• Kent County Council transferred levy funds to Haven Children Services and Majestic Family Services.

• De Montfort University transferred levy finds of £48,000 to children’s home provider Aditi to fund eight learners completing children, young people and families Level 4 apprenticeship qualifications

• West Sussex County Council transferred £21,000 to a children’s service provider to fund three Level 3 Teaching Assistant apprenticeships.

Other training costs

In order to count in ratio, Level 2 and 3 qualified staff must hold a paediatric first aid certificate. The Childcare Company offers this as part of the EYE apprenticeship, meaning that there is no extra cost. From March this year the organisation has also embedded a Level 2 SEND qualification within the Level 3 early years educator apprenticeship, also saving money on further training.

Save on recruitment costs

Recruitment costs are an ongoing drain on most nursery businesses. The Chartered Institute of Personnel and Development (CIPD) estimates the average cost of filling a vacancy is £6,125, rising to £19,000 for a manager role. The Childcare Company offers a free apprenticeship recruitment service allowing settings to find the right talent, effortlessly. Candidates are selected specifically to fit a nursery’s culture and goals. There is no doubt that nurseries are facing challenging times, but apprenticeships could be the best kept secret in the money-making toolkit.

How to save £20,853
In these challenging times, any cost saving is welcome, but the Childcare Company has calculated that taking on one of its Level 3 apprentices can save a nursery up to £20,853 when compared to a traditional hire.

COSTS
Recruitment: Non-apprentice: £6,125 (according to the CIPD), Apprentice: £0
National Insurance contributions: Non-apprentice: £3,114.15, Apprentice: £0
Salary: Non-apprentice: £25,761 (average salary for a nursery practitioner in the UK), Apprentice: £17,271 (average salary for an apprentice nursery practitioner in the UK)
Paediatric First Aid: Non-apprentice: £200, Apprentice: £0
Level 2 SEND qualification: Non-apprentice: £299, Apprentice: £0
Level 3 EYE diploma: Non apprentice: £1,975, Apprentice: £0
PAYMENTS
Bonus (see feature): Non-apprentice: £0, Apprentice: £1,000
TOTAL
Non-apprentice £37,474, Apprentice £16,621

Apprentice Recruitment Service – The Childcare Company

Early Years Apprenticeships – The Childcare Company

The Childcare Company – Childcare & Early Years Apprenticeships