19th September 2016
APPRENTICESHIP LEVY FUNDING PROPOSAL UPDATE
PROPOSALS FOR APPRENTICESHIP FUNDING IN ENGLAND FROM MAY 2017
The Department for Education has released its Proposals for Apprenticeship Levy Funding document, setting out further details on the implementation of the Apprenticeship Levy, from April 2017. The Government has invited feedback on the discussion paper, via an online survey to be responded to by employers and training providers by a deadline of 5th September 2016. The Government’s proposals are summarised below, along with details of next steps ahead of the levy’s introduction in April 2017.
APPRENTICESHIP LEVY – KEY PROPOSALS
Start date for the new system:
- The Apprenticeship levy will come into effect in April 2017. Employers will declare levy payable based on payroll year to date. Therefore the first time eligible employers will have to declare their liability to HMRC will be in May 2017 for levy due on their April payroll. Levy-paying employers will be able to see corresponding funds in their digital accounts shortly after their final declaration to HMRC, so after 22 May.
- To simplify the new apprenticeship funding system for employers, it is proposed that any apprenticeships commenced from 1st May will be funded according to the new rules. Levy paying employers will be able to purchase training through the new digital system from the very start of May as the earliest payments for training will leave their accounts in the following month. This is because the new system will pay providers one month in arrears for training they report has been delivered.
- Those employers that do not pay the levy will continue to access the current funding system until the terms change on 1 May 2017, after which the funding arrangements set out below will come into effect.
- 15 funding bands are proposed for the apprenticeship funding system, with the upper limit of these bands ranging from £1,500 to £27,000. All existing and new apprenticeship frameworks and standards will be placed within one of these funding bands.
- The upper limit of each funding band will cap the maximum amount of digital funds an employer who pays the levy can use towards an individual apprenticeship. The upper limit of the funding bands will also cap the maximum price that government will ‘co-invest’ towards, where an employer does not pay the levy or has insufficient digital funds and is eligible for extra support. It will be up to employers to negotiate prices with providers, within these funding limits.
- For all STEM framework pathways, an increase in the current government-funded adult rate is proposed, by 40% at Level 2 and 80% at Level 3 and above; frameworks will then be allocated to the nearest funding band. It is stated that this uplift takes into account the fact that employers of these apprentices are currently “disproportionately likely to be paying extra to providers on top of the funding provided by government”.
Proposed funding bands:
- If an employer has not paid the levy and would like to train an apprentice, it is proposed that they ‘coinvest’ 10% of the cost of the apprenticeship training and assessment with government funding to cover the remaining 90% of the cost.
- If a levy-paying employer wants to invest more in apprenticeship training than is in their digital account and at any point in time has insufficient funding available in their digital account to meet the full costs of training, it is proposed that the employer should ‘co-invest’ 10% of the cost of the apprenticeship training and assessment with government funding to cover the remaining 90% of the cost.
- In the first year of the new funding system, employers will pay their co-investment share directly to training providers. Over time, a system where the employer can pay this through their digital account will be implemented.
Training 16-18 year old apprentices:
- It is proposed that employers who take on a 16 to 18 year old on an apprenticeship framework or standard, should receive £1,000 to help meet the “extra costs” associated with supporting young apprentices in the workplace. This would be paid to employers in two equal instalments at 3 months and 12 months
- Employers with fewer than 50 people working for them should be able to train 16 to 18 year old apprentices at no cost. The government would pay 100% of the training costs for these individuals.
- In addition, under the proposals an extra £1,000 will be provided to the training provider for supporting an apprentice who is between 16 and 18 years old, again paid over two equal instalments at 3 months and 12 months. This would be on top of the funds providers receive for core training and it will not come from employer digital accounts.
Support for care leavers and those who have an Education, Health and Care plan
- Employers and providers who train an apprentice who is aged 19 to 24 and has previously been in care or who has a Local Authority Education, Health and Care plan, should each receive £1,000 to help with these additional costs. Employers would receive this payment via their training provider.
- Employers with fewer than 50 people working for them should be able to train an apprentice who is aged 19 to 24 and has previously been in care or who has a Local Authority Education, Health and Care plan at no cost. The government would pay 100% of the training costs for these individuals.
English and Maths Training
- When employers agree with their provider that their apprentice needs training to meet minimum standards in English and maths, the provider should be able to claim a flat rate of £471 from the government to deliver each qualification. This is a continuation of the current system for apprenticeship standards
- Where there is evidence of requirements for greater learning support, providers should be able to claim costs from government up to an additional £150 each month for apprentices with a learning or physical disability. This is a continuation of the current system of support.
Cross-border funding rules:
- The Government states that it will “simplify the current rules and apply a single test for whether apprenticeship training can be funded through the English system”; based on whether the apprentice’s main place of employment is England. This would mean that when training an apprentice whose workplace is in England, employers will be able to use the funds in their digital account to pay for training and access government co-investment if they do not pay the levy.
Equivalent and lower level apprenticeships:
- Employers will be able to use funds in their digital account or access government co-investment support to train any eligible individual to undertake an apprenticeship at a higher level than a qualification they already hold, including a previous apprenticeship.
- In addition it is proposed that individuals can be funded to undertake an apprenticeship at the same or lower level than a qualification they already hold, if the apprenticeship allows the individual to “acquire substantive new skills” and the training content is “materially different” from any prior training or a previous apprenticeship.
- Monday 5th September – The online survey which seeks feedback on the proposals will close
- October 2016 – Responses to the survey will be used to “refine and develop” the proposals before the
- Government publishes:
- The final funding bands that will apply in the new system
- The final, full set of technical rules that underpin the funding system
- Confirmation of how the proportion of pay bill that is paid to employees living in England will be calculated
- December 2016 – the Government will publish:
- Further employer guidance from HM Revenue and Customs (HMRC) on how to calculate and pay the apprenticeship levy
- April 2017 – Apprenticeship levy launch