It has been several months since the Autumn Statement of last year and Government proposals to introduce an apprenticeship levy to help fund ambitious plans for the upgrading and expansion of apprenticeships. Today, the Government has issued further details of how employers in England might access levy funding but, before these are finalised, has once more invited views from interested parties.

A Government survey, “Proposals for apprenticeship funding in England from May 2017” will run from now until 5 September, 2016. The plan is then for the Government to publish an updated version of these funding proposals by October and updated employer guidance on calculating and paying the levy in December.

Whilst further details have been awaited on the levy in the intervening months since last summer, there has also been various expressions of concern from employer representatives as to its possible nature and effect but also the timing of its introduction in April 2017. Any hopes that the introduction of a levy might be postponed, however, will have been dashed today as the Government announcement makes clear it will be pressing ahead with the previously-announced proposals and a commencement date of 1 April, 2017. Access to the funds generated by the levy and as otherwise set out in these proposals for apprentices in England will then apply from May, 2017.

Levy, what levy?

Despite the issuing of a survey today concerning access to apprenticeship funding in England, the core principles of the levy itself are unchanged. These are that a levy of 0.5% of the pay bill of larger UK employers will be collected through PAYE alongside income tax and NI in order to support ambitious proposals to upgrade apprenticeships, whilst at the same time swelling the numbers. A target of 3 million apprenticeships by 2020 had been proposed by the previous Government.

The levy will be collected from UK public and private sector employers with a pay bill in excess of £3,000,000. It is estimated that it will apply to some 2% of UK employers.

Although Skills Training is a devolved policy issue, the levy will nonetheless apply to employers in Northern Ireland, Wales and Scotland. The Government has said it plans to work with those administrations to resolve how they intend the levy to operate in their areas. However, for those reasons, today’s survey is aimed at employers and training providers based or operating in England only.

For further details see: Government guidance

Key proposals for accessing apprenticeship funding in England revealed today :

  • the new funding system will come into effect on 1 May 2017 so that levy paying employers can use funds in their digital account to pay for training from the first month they declare levy payable through the PAYE system. All apprenticeships started before 1 May will be funded through to completion according to the existing rules
  • all apprenticeships will fall within one of 15 funding bands for the purpose of the new apprenticeship funding system, (whether as existing frameworks or new apprenticeship standards).
  • The upper limit of the funding bands will be £27,000, which is also the maximum sum the government will ‘co-invest’ towards training where an employer does not pay the levy or has insufficient digital funds to do so but is eligible for extra support. It will be up to employers to negotiate prices with providers, within these funding limits.
  • Employers will be asked to contribute or “co-invest” 10% of the costs towards apprenticeship training and assessment if they do not pay the levy or if they pay the levy but do not have sufficient funds in their digital account to cover the training and assessment costs in a particular month. (The government would pay the remaining 90% in that event).
  • Additional support will be available for smaller employers (those with fewer than 50 employees) which train 16-18 year old apprentices and for those young apprentices themselves.
  • The expectation is that, from next May, employers will be able to access funds and support for apprentices working in England, provided the training involves acquiring substantive new skills and is materially different from any prior training or a previous apprenticeship
  • “Learning support” for training providers working with apprentices with additional learning support needs will be maintained.

Responding to the survey

Employers and training providers in England likely to be affected by the levy and/or to require access to funding for apprenticeships are invited to respond the survey by 5 September, 2017. The survey can be viewed here: survey

Comment

With objectives of significant improvement of apprenticeship standards but also a rise in number to 3 million, funding has become an even greater issue for the future of apprenticeships in the UK. At a high level, UK employers have been aware of the principles of the levy for a number of months. Today’s announcement now starts to provide details as to how employers in England may be able to access and make use of it.

Whilst there is still considerable work to be done to iron out the mechanics of the levy and, importantly, how it will operate across the devolved areas of the UK to ensure fair and straightforward access, what is clear is that the levy will be introduced in approximately 8 months’ time. It appears such further clarification, along who Government guidance, can be expected by the end of the year.