Just as apprenticeships themselves are changing, government funding for apprenticeships is also in the midst of reform. An Apprentice Levy will be introduced from April 2017 which aims to:
From April, for apprenticeship funding purposes, employers will fall into one of two groups:
The apprenticeship funding guidance given here applies to Trailblazer Apprenticeships in England only. Wales, Scotland and Northern Ireland have their own arrangements for funding apprenticeships.
The new Apprentice Levy aims to secure a long-term funding solution for high-quality apprenticeships that better meet employer needs. Although ALL employers will benefit from the levy, in terms of extra funding available for training – only the largest employers will have to contribute towards it.
Example: Employer with an annual pay bill of £5,000,000
Levy paying employers will access apprenticeship funding via the new Apprenticeship Service (AS)
The Apprenticeship Service is a computerised service whereby levy paying employers will have an online account to access their levy fund for training apprentices. The apprentice levy will be taken monthly from April 2017 payroll at a rate of 0.5% of a companies monthly wage bill. The government will then top up this amount by 10%. Money from the levy can only be used to pay for apprenticeship training with an approved apprenticeship training provider. The AS will also hold lists of apprenticeship training providers. In time employers will be able to make payments to them directly from their account.
Where a levy paying employer doesn’t have enough in their digital account to pay for their apprentices training, they will receive co-investment at the same level as non-levy payers.
Employers will need to complete an Employer Agreement with the Skills Funding Agency (SFA) to pay Training Providers to carry out apprenticeship training.
Latest Update: AS have developed a narrated video outlining the employer journey from the account home screen and registration to the funding and apprentice management sections. View video.
Employers with wage bills of less than £3 million per annum will continue to receive government funding for apprenticeships in the same way as now, via co-investment. As part of the apprenticeship reforms from May 2017 non levy paying employers will only need to invest 10% of the cost of an apprentices training. Government will co-invest the remaining 90%.
Extra Support for Small Employers
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