As from April 2017, the way apprenticeships in England are funded is changing. The apprenticeship levy will be introduced to help support the government’s target of 3 million apprenticeship starts by 2020. This funding can also be used to support upskilling and retraining so could be offered to women within your workforce to upskill to STEM qualifications and job roles. We have put together a quick summary to help you understand the levy. These funding guidelines apply to England only, for further information about skills funding in the devolved nation, see here.
Large Employers (Annual Payroll > £3 million)
- Employers with an annual payroll over £3 million will pay 0.5% of their total payroll
- The levy will apply to all employers operating in the UK (including, private, public sector and voluntary sector organisations)
- If you pay the levy, you will receive a £15,000 allowance to offset the overall cost and put towards apprenticeship training. The government will also add a 10% top-up to monthly funds to be used for apprenticeship training in England
- Employers can spend their levy funds on the costs of an apprentice’s training, assessment or certification. This includes either existing employees or new recruits, as long as the training meets an approved standard or framework and the individual meets the apprentice eligibility criteria
- Employers can only spend their levy funds on apprenticeship training delivered by an approved provider. For more information about the forthcoming training provider register or how to become an employer-provider, see here
- The government has published funding bands for apprenticeships starting from May 2017. There will be fifteen bands, up to a maximum value of £27,000. The full list of bands for frameworks and approved standards is here. There will be a STEM framework funding uplift at 40% of the current government-funded adult rate at level 2 and 80% at level 3, with the frameworks then allocated to the nearest funding bands
- Employers will have 24 months to spend the funds in their account, on a ‘use it or lose it’ basis
- From April 2018, employers will be able to transfer up to 10% of their funds for a year to another employer.
Small and Medium Sized Employers (Annual Payroll < £3 million)
- All non-levy funded apprenticeships will be funded based on a 9:1 ratio of government to employer funding. The government is calling this ‘co-investment’
- The co-investment is subject to the allocated funding bands (see above) – the Government will only co-invest up to the upper limit of the funding band
- Small employers with fewer than 50 employees will be able to train 16-18 year olds apprentices at zero cost, with the government covering 100% of the cost.
- All levy funded apprenticeships must be delivered through an approved provider
- To find out more about becoming an approved provider and to be listed on the new Register of Approved Training Provider, see here
- There are different funding offers available for training providers who train 16-18 year olds and individuals in low income areas, particularly in the first year of the levy as transitional measures. For full details, please see here.