News on the latest apprenticeship levy and funding updates

News on the latest apprenticeship levy and funding updates

16/08/2016 - by Livia Mordant

Overall, great news – there will be more funding available, more products at better rates, and more potential apprentices. 

News on the latest apprenticeship levy and funding updates

The Government’s most recent levy updates and new funding model for apprenticeships confirmed that the levy will be implemented in April 2017 as planned, dispelling fears of a delay.

The new funding system will come into effect on 1 May 2017, because May is the first month that levy paying employers will declare levy payment to HMRC.

Apprenticeship levy and funding system

We have highlighted some key points from these latest updates:

The levy

  • The rates that all employers will have to pay for apprenticeships, regardless of being affected by the levy or not are as follows: 
    • Employers without levy funding will have to pay towards the cost of an apprenticeship – a 10% contribution and the government will “co-invest” the remaining 90%.
    • Levy paying employers, those with annual payroll bill over £3 million, will receive a 10% monthly top-up. If their levy account is insufficient then like smaller employers, 90% of their additional apprenticeship training costs will be subsidise by government.
  • Employers with fewer than 50 employees that train younger apprentices (aged 16 to 18), will not have to pay the 10% co-investment requirement, so they do not have to contribute towards the cost of training young apprentices.
  • The levy is not linked to academic years and is paid monthly.
  • As soon as an employer has funds in their levy account they will be able to select a provider and an apprenticeship programme. By committing to training via the digital account, the employer will be entering into a contract agreement with the provider.
  • Employers that don’t pay the levy will make payments for apprenticeship training directly to providers. 

The funding system

  • The proposed apprenticeship funding model will be made up of 15 bands, each with an upper limit ranging from £1,500 to £27,000. Setting limits on the amount of government or digital funds that can be used for a single apprenticeship supports quality training whilst ensuring apprenticeships are affordable for individual employers and deliver value for taxpayers.
  • All existing and new apprenticeship frameworks and standards, depending on the level and type of apprenticeship, will be placed within these 15 funding bands and it will be up to employers to negotiate prices with providers.
  • There is extra funding for young apprentices and care leavers:
    • Government proposes to pay £1,000 to employers and a further £1,000 to training providers if they train a 16-18 year old apprentice.
    • Government proposes to pay £1,000 to employers and a further £1,000 to training providers if they train 19-24 year olds leaving care or who have a Local Authority Education and Healthcare plan.
  • Funding will now be available for individuals to undertake apprenticeships at the same or lower level than a qualification they already hold, but only if the programme provides new skillsand the content of the training is different from any prior training or apprenticeship (i.e. Media graduate can do L2 plumbing but not L3 Media).

Our expert, Richard Marsh, Operations Director at Capita Talent Partnerships, gives his views on the new funding system and the apprenticeship levy update:

“The increased political focus on apprenticeships has exposed the problems with  funding apprenticeships as if they were college courses, and so  they have now earned their very own funding system. The new levy funding model seeks to support an open, all age and all level programme that does not try and influence who gets an apprenticeship by funding those in different postcodes or age brackets differently.

The prevailing theory is that greater employer investment and involvement can only be a good thing so we shall see how the new levy and model will work. It will be several years before the new balance settles, but this is at least the start of a very comprehensive and hopefully effective apprenticeship funding system.”

See the original article published in FE Week from here.

Overall, there is some great news – there will be more funding available, more products at better rates and more potential apprentices.

Are you ready for the apprenticeship levy?

Capita Talent Partnerships, a Grade 2 Ofsted provider, delivers and manages traineeship and apprenticeship programmes for numerous businesses and are here to guide you through all of this change. Our Further Education funding experts have spent a lot of time thinking about what the levy will mean for you and how you can start planning now.

Get in touch now to make sure you make the most of your funds!

Useful links:

  • The SFA has published a suite of documents regarding the changes, which can be found online here.
  • Updated levy guidance can be found online here with a useful apprenticeship levy funding calculator here.
  • Survey for feeding back on funding proposals can be found online here. This has to be submitted by 5 September. The final support package will be confirmed in October 2016.