27 September 2016
An apprenticeship levy is to be introduced with effect from April 2017 to fund apprenticeships. Employers with an annual wage bill in excess of £3m will be required to pay 0.5% of the excess wage bill into an apprenticeship fund which the employer can then access to fund apprenticeships. The fund must be used by the employer within 18 months, after which time it will expire and go into a general ‘pot’.
The government has now published its proposals for apprenticeship funding in England, which detail proposals for the operation and administration of the levy. As apprenticeships are classed as ‘education’, which is a devolved matter for Northern Ireland, Scotland and Wales, these proposals only apply to England.
It is proposed that a new ‘digital account’ funding system will come into force from April 2017 with apprenticeships commencing from 1 May 2017 being funded under the new rules through a ‘Digital Apprenticeship Service’.
There will be 15 funding bands with funding ranging from £1,500 to £27,000 into which all new and existing apprenticeships will be placed. The funding will be based on ‘individual framework pathways’ to reflect the rate of funding the government currently pays providers for training adult apprentices.
Employers who offer apprenticeships but do not pay the levy will pay 10% of the cost of the apprenticeship and the remaining 90% will be paid for by the government. Employers who pay the levy but want to invest in more apprenticeships than their levy covers will also have 90% of the cost of these apprenticeships funded by the government.
There will be an additional £1,000 of funding for employers who train an apprentice aged 16 to 18. There will also be an additional £1,000 of funding for an apprentice aged 19 to 24 who is leaving care or who has a Local Authority Education, Health and Care plan, and employers with less than 50 employees will receive 100% of the training costs for these apprentices. For employers who train apprentices who need greater skills in English or maths, the government will make a flat-rate payment of £471 for each subject. For those apprentices requiring learning support, learning providers will be able to claim the cost of this support up to an additional £150 each month for these apprentices.
It is anticipated that the government will publish the formal funding rules in October and that guidance on how employers should calculate and pay the apprenticeship levy will be published by HMRC in December.
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