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Introduction

Government releases final changes to the apprenticeship levy

Department for Education released updates to the apprenticeship funding reforms.

Government releases final changes to the apprenticeship levy

All the latest about the levy

The Government promises much needed support for young apprentices.

This week, the Department for Education released further updates to the apprenticeship funding reforms. After publishing their initial proposal in August, the Government consulted with 892 employers and providers to create an amended version that accommodates their feedback. The new report represents a welcome change of heart from the Government, and will have a huge impact for young apprentices across the country.

Who will the apprenticeship reforms affect? Read our guide.

The Levy

The reforms are designed to give employers more control over choosing and paying for apprenticeship training. Part of the reforms is the new apprenticeship levy. The levy will be paid by employers with a pay bill over £3 million from April 2017, aiming to double investment in apprenticeships to £2.5 billion by 2020.

The major changes

FUNDING FOR 16-18 YEAR OLDS

  • In August, the Government outlined their plans for a simpler funding system for young apprentices. This proposal faced some objections across the sector and sparked the #SaveOurApprenticeships campaign launched by FE News.
  • The updated policy pledges extra financial support for 16-18 year old apprentices.
  • Higher prices for younger apprentices would act as a disincentive for some employers, so the government has proposed a £1,000 payment to both the employer and provider when they train a 16-18 year old.
  • As 16-18 year old apprentices make up around 25% of new starts, this will have a huge impact for young people across the country, giving them the support they need to succeed.
  • In the transitional period, the provider will also receive an uplift payment of 20% of the funding band maximum of a framework for each 16-18 year old they train. This will help providers change onto the new system.

Areas of disadvantage

  • After a significant government U-turn, the new funding reforms are designed to offer more support for people in disadvantaged areas. This will ensure apprenticeships are open to everyone – no matter where they're from, their background or family circumstances.
  • To neutralise the higher costs of delivering an apprenticeship to those from disadvantaged backgrounds, the Government has devised a simple plan for apprentices on frameworks only.
  • Providers will receive an additional £600 to train an apprentice who lives in the top 10% of deprived areas (as per the Index of Multiple Deprivation)
  • £300 for each apprentice who lives in the next 10% (between 10 – 20% most deprived)
  • £200 for those in the next 7% (between 20 – 27%)
  • These payments will come straight from the Government, not the employer's DAS account.

Care leavers

  • During the summer, the Government invited feedback and evidence of the costs associated with delivering an apprenticeship to a 19-24 year old who was formally in care or who has an Education and Health Care Plan.
  • The new policy delivers extra funding for these learners, irrespective of the subject or length of the apprenticeship.
  • Employers and providers who take on a 19-24 year old apprentice formally in care or with an Education and Health Care Plan will receive a £1,000 payment to help with the additional costs.
  • The transitional 20% uplift for provider will also apply.
  • These payments will come straight form the Government, not the employer's DAS account.

Expiry dates

  • The expiry date for levy and top-up payments held in the DAS was 18 months.
  • This has now been increased to 24 months, giving employers more time to plan their training and spend their levy.
  • This may impact SMEs whose apprenticeship training is partially funded by outdated levy payments.

Funding bands

  • After May 1st 2017, the two types of apprenticeships schemes – standards and frameworks – will both be funded the same way via DAS.
  • The new apprenticeship funding system will be made up of 15 funding bands, ranging from £1,500 to £27,000.
  • Each apprenticeship will be assigned an upper funding limit. Then the employer must negotiate with the provider on the best price for the training they require.
  • The upper limit will also cap the maximum amount the Government will co-invest with employers who do not pay the levy.

English & maths

  • The Government will work with employers to ensure everyone has a basic level of maths and English.
  • When both the employer and provider agree that an apprentice needs extra support to meet this minimum standard, the provider will be able to claim a flat rate of £471 from the Government to deliver this qualification.
  • When surveyed, over 75% of employers agreed with this figure, and over 66% of providers did too.
  • Providers will also be able to claim an additional £150 a month to train apprentices with learning, mental or physical disabilities.

What does this mean for apprentices?

The new funding reforms promote equal opportunity for all. Young apprentices from deprived areas will no longer be at a disadvantage, and more employers will look to train young people in the workplace.

 

Want to find out more?

Download our guide to find out how the apprenticeship reforms will affect you.

Download guide