Ten things we now know about apprentices and the Levy following today’s announcement

August 12 2016

The government has announced the long awaited new guidance on the Apprenticeship Levy today, including additional information on the proposed funding structure. Employers are invited to comment on these proposals by 5th September 2016, and the final details will be published in October 2016. Here’s what we now know:

1. The government is proposing to cover 90% of training costs for non-levy paying organisations

The government will fund 90% of apprenticeship training costs for non-levy paying employers (including smaller businesses). Employers will pay the remaining 10%. This rate will also apply to Levy-paying employers once they have spent all their funding pot.

2. 16-18 year olds, young care leavers and young people who have additional educational, health or care needs will receive additional funding

The government will pay 100% of the training costs for 16- to 18-year-olds, care leavers aged 19 – 24 and young people aged 19 – 24 with an EHC plan (education, health and care) employed by a small employer (<50 employees). For larger employers employing anyone in these groups, the government will provide £2,000 of addition funding to cover extra costs (£1000 will be paid to the employer and £1000 to the training provider).  

 3. Employers can use funds to train existing employers through apprenticeships

Employers will be able to use the funding to train existing employees as apprentices. This is as expected, but this could potentially change in future years. This funding only covers apprenticeships and not other types of learning and development.

4. There is a new calculator tool to help employers

The new tool  helps employers calculate if and how much their organisation will pay through the apprenticeship levy, how much they will have available to spend on apprenticeships and how much the government will contribute towards the cost of training.

5. There will be additional, separate funding to support with maths, English and extra support needs

The government will continue to fund Maths and English support for apprentices directly; this will not come out of an employer’s levy pot and will be paid directly to the training provider. The government will also provide additional support for disabled apprentices and other apprentices with additional support needs.

6. Employers will not be able to use their levy funding to pay Apprenticeship Training Agencies to deliver training in 2017 – 18

Employers will only be able to use their levy funding to pay for training for their directly employed apprentices, not apprentices employed though ATAs. However, the government is seeking views on proposals to allow employers to transfer 10% of their funds to an ATA’s digital account from 2018.

7. Employers might be able to transfer 10% of funds to other employers

The government is considering introducing the means for employers to transfer up to 10% of the levy funds entering their digital account in a given year to another employer with a digital account from 2018 onwards.

8. This means that employers will have to wait to be able to use the levy to fund training in their supply chain

Employers now know that they will definitely not be able to use their levy funding to pay for apprenticeship training in their supply chain in 2017 – 18, but this is being considered for the future.

9. New guidance is available for employers who want to deliver their own training

The government is proposing two options for employers, one if they want to deliver some or all of the training for their own apprentices, and another model if they want sell their training to other employers as well. The guidance is available here.  

10. The proposed funding bandings have been clarified

There will be 15 funding bands ranging from £1500 to £27,000. This outlines the maximum amount of funding the government will provide for each apprenticeship standard.


Our verdict:

Despite the delay, there is nothing unexpected in these proposals; however, the fact that employers will have to wait until October for the confirmation of final details is frustrating with the April 2017 implementation date fast approaching. Employers with apprentices in more than one country in the UK i.e. England, Wales, Scotland and Northern Ireland, will be keen to hear more details from all the four nations’ governments on how the different systems will align, and the construction sector especially will be keen for a final verdict on their own industry training levy and supply chain arrangements. It’s very positive to see that the focus on supporting the youngest apprentices has been maintained, and this will help employers create sustainable talent pipelines for young people leaving school at 16 at the beginning of their career. It’s vital that the apprenticeships are high quality, inclusive, accessible opportunities that support the learner at every stage. As part of our Youth Employment Framework, we have developed a number of resources available for employers who want to create sustainable apprenticeships including a range of how to guides and our Youth Employment Assessment Tool.