Announcement on the apprenticeship levy

Apprenticeships

The Department for Education has announced the arrangements for the new style apprenticeship levy, which is payable from April 2017. Included is an online tool for companies to use to work out how much levy, if any, they will have to pay. In brief, the rate has been set at 0.5% of an employer’s paybill, to be paid through PAYE. Employers will get a £15,000 allowance, so only those with paybills over £3m would have to pay in.

Further details on how the levy will work for those who have to pay, and those who do not, will be published in due course, but it should be noted that apprenticeship policy is devolved and arrangements will differ in Scotland, Wales and Northern Ireland.

Key points are as follows:

  • The Government does not propose to delay the start of the levy, which the CBI, MNTB and many others wanted them to do. It will start in April 2017 as planned, though some part of the payments system will have a further year of interim arrangements.
  • To better manage funding, they have more than doubled the number of funding bands from 6 to 15, and broadened the range from £1,500 to £27,000. These are caps to the amount of funding which employers can draw, regardless of whether they pay in or not.
  • There will be extra payments for English and Maths, and for young people aged 16-18. There is also a new extra payment for young people aged 19-24 who have left the care system.
  • There is a proposal to waive the co-investment requirement for small employers that train 16-18 yr old apprentices. That is companies which do not pay the levy will only have to pay 10% of the training costs, with the remaining 90% paid for by the government. For the very smallest firms (less than 50 employees) the levy pot will cover all training costs.
  • Employers may use levy funds to retrain existing workers, ideally at a higher level than any existing qualification, if the apprenticeship will allow the individual to acquire substantive new skills and the content of the training is materially different from any prior training or a previous apprenticeship.
  • Employers will not be able to spend levy funds on anything other than apprenticeships.

Before it is accepted for funding, an apprenticeship must meet the DfE’s ‘Apprenticeship Standard’, the development of which must be employer led, with at least ten companies signing up in support.

A note from the DfE Apprenticeships Directorate

As you will be aware, as part of our apprenticeships reforms, employers are being given more control over choosing and paying for apprenticeship training. Whilst only some employers will be required to contribute to the new apprenticeship levy, there will be changes to the funding of apprenticeship training for all employers. The system also needs to be easy for employers of all sizes to navigate, choose the apprenticeship training you want to purchase and negotiate on price.  We are therefore simplifying some of the complex funding arrangements that currently exist.

To deliver these changes, we am pleased to confirm that we have today published:

Proposals for apprenticeship funding in England from May 2017. This document sets out our initial proposals for how apprenticeship training would be funded once the levy comes into effect next year.  This includes proposed funding bands for existing apprenticeship frameworks and standards that have been approved for delivery.  The proposals are supported by a short survey (here) seeking feedback by 5 September.

Proposals for a new Register of Apprenticeship Training Providers. This documents sets out proposals on who should be able to provide apprenticeship training in England.  Again, we are inviting feedback by 5 September via a separate survey (https://www.surveymonkey.co.uk/r/L8L67YP).

Guidance for employers thinking about becoming apprenticeship training providers. This document will be of interest to employers who pay the levy, and may wish to act as their own training provider in the new system.

Apprenticeship funding calculatorWe have produced this tool to help employers understand what levy they will pay and how they could use the new digital service to plan and fund training.

Updated guidance on the apprenticeship levy: how it will workWe have also updated the existing, very popular online guidance, which gives employers a clear explanation of how they will pay the levy, manage and use their funds in the new system.

In addition to seeking feedback on these proposals, we will use the next few weeks to test them further, including how they support the Government’s emerging industrial strategy and how they ensure that individuals from all backgrounds and parts of the country have the opportunity to get on in life.  We aim to publish final policy details in October.

Needless to say, we are keen to receive feedback on the proposals from Trailblazers and/or individual Trailblazer members via the above surveys.

Standards Development Team

12 August 2016

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