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  4. New funding details for the apprenticeship levy released

New funding details for the apprenticeship levy released

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Earlier this week (25 October 2016), the Department for Education (DfE) released an update to clarify the policy for apprenticeship funding. The policy will be implemented in May 2017, following the launch of the apprenticeship levy, and will apply to all organisations in England.

Following the UK Government proposals that were announced in April, then August 2016, the DfE has made some key changes to the funding policy in response to feedback from employers and other interested stakeholders.  While there have been a number of developments, some aspects remained unchanged. Here is a brief summary of update:

  • Changed: Additional cash payments, equal to 20 per cent of the funding band maximum, for 16-18-year-old apprentices, to simplify the funding model and help training providers (particularly those that take on a high number of 16-18 year olds) adapt to the levy
  • Changed: A £1,000 payment from the UK Government to both employers and training providers when they train 16-18 year olds, as well as 19-24 year olds who were in care or who have an Education and Health Care Plan
  • Changed: A simplified funding system for apprenticeship frameworks, to support people from disadvantaged areas and ensure the opportunity to undertake an apprenticeship is open to everyone
  • Changed: Longer period of time for employers to spend funds in their digital account, now with 24 months before they expire, an increase from our original proposal of just 18 months
  • Unchanged: Higher funding for STEM apprenticeships in the following sector subject areas: Engineering and Manufacturing Technologies; Information and Communication Technology; Science and Mathematics; and Construction, Planning and the Built Environment; including an 80 per cent increase on the current UK Government-funded adult rate for Level 3 and above
  • Unchanged: For employers that have an annual wage bill of less than £3 million, and therefore have not paid into the levy, they will only be required to pay 10 per cent towards the cost of training apprentices, with the UK Government paying the remaining 90 per cent
  • Unchanged: A small employer co-investment waiver that means the UK Government will make a 100 per cent contribution to the cost of training to those that have fewer than 50 employees and take on apprentices who are 16-18 years old, 19-24 year old care leavers or 19-24 year olds with an Education and Health Care Plan
  • Unchanged: A commitment to introducing digital accounts in 2018, to enable employers to transfer digital funds to other employers in their supply chains, sector or to Apprenticeship Training Agencies

Read the DfE policy document to obtain the full details of the funding changes.

For more information on the levy, visit our apprenticeship levy information page.