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Apprenticeship Levy - Proposal for apprenticeship funding in England

Friday 12 August, 2016

The government reform to apprenticeships includes changing the way apprenticeships in England are paid for, underpinned by a new apprenticeship levy, to be paid by larger employers from April 2017. The idea behind the reforms is that the levy will lead to greater levels of investment in training and that employers will be given more influence over how apprenticeships are designed and paid for. This will assist and encourage employers to seek out high quality, relevant training that meets their needs.

Employers in all sectors will need to pay the apprenticeship levy if they have a payroll bill of more than £3 million each year. In England, these employers will be able to access a new digital apprenticeship service that allows them to spend the levy they have paid on apprenticeship training. The vast majority of employers will not be eligible to pay the levy and these employers will continue to benefit from government support to pay for apprenticeship training.

You can read the full proposal document here. The key points include: 

Start date for the new system: 1st May 2017. 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.

Funding bands: It is proposed that the new apprenticeship funding system should have 15 funding bands, 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 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.

Simpler funding system for apprenticeship frameworks: They are proposing to allocate each individual framework pathway to a single funding band, regardless of the age of the learner, or geographic location. This will bring frameworks into line with the funding system for apprenticeship standards and dramatically simplify the experience of employers.

Co-investment rate: They propose that employers co-invest 10% of the costs, with government paying the remaining 90%.

Support for small employers training 16-18 year olds: They propose to waive the co-investment requirement for small employers (less than 50 employees) that train 16-18 year old apprentices. These employers would not have to contribute towards the cost of training apprentices. They are also proposing that the government pays 100% of the apprenticeship training costs for small employers where the apprentice is a 19-24 year old care leaver or is 19-24 years of age and has a Local Authority Education, Health and Care plan.

Extra support for apprentices aged 16-18 years of age, 19-24 year old care leavers and those who have an Education, Health and Care Plan: Proposal is to make an additional payment of £1,000 to employers and a further £1,000 payment to training providers to help with these extra costs.

Support for English and maths training: The government is committed to helping apprentices gain the minimum standard of Level 2 in English and maths. They propose to pay training providers (direct from the government) £471 for each of these qualifications.

Learning support: This is the extra amount that we propose to pay to the training provider where an apprentice requires additional learning support as a result of conditions such as dyslexia, learning difficulties or disabilities. Proposal is to pay training providers up to £150 a month to support these learners, plus additional costs based on evidenced need.

Cross-border training: They propose that employers should be able to use the funds in their digital account, and benefit from government co-investment support to pay for training apprentices whose main place of work is in England – whether they live in England or other parts of the UK.

Re-training: They propose that employers should be able to use funds in their digital account and access government co-investment support to train individuals to undertake an apprenticeship.

Transferring of digital funds: From 2018 they intend to allow levy-paying employers to be able to transfer up to 10% of the annual value of funds entering their digital accounts to other employers on the digital system.

Employers and Training Providers can give their views on the initial proposal by completing a survey which closes on the 5th September 2016. 

Enquiries can be sent to the Apprenticeship Funding Unit at