Levy details published: Government contributions extended

The long awaited details of how the apprentice levy will be applied have been published this morning. The headline news is that businesses of all sizes will only be required to contribute 10% of the cost of training an apprentice. Under the plans, government will cover the 90% of remaining training costs. There is now an online calculator available for employers to work out how much they will pay.

There was also confirmation that there will be no delay – the levy’s introduction is set for April 2017, despite calls from employers that it be delayed.

In addition, smaller firms with fewer than 50 employees which take on a 16-18 year old apprentice will not be required to make any financial contribution towards the cost of training. However, while there are limits on the type of training that business can spend their levy money on, employers will be able to use levy funds to retrain workers in new skills, even if they have prior qualifications.

The DofE says this it has decided this in order to give companies the freedom to “Make the training decisions that are right for them so they can train any individual to start an apprenticeship, as long as it is significantly different from their previous qualifications”.



‘Getting reform right is crucial’

There was, however, confirmation that the levy funds can only be used towards the costs of apprenticeship training and end point assessment. There were hopes that the government would broaden out the scope of what funds could be spent on, but that has been dashed. It was this measure in particular that has drawn criticism from the CBI, which had hoped to see wider application allowed.

“The Government’s announcement provides business with much needed information which shows some progress, including support for smaller firms, but fundamental problems remain,” CBI director-general, Carolyn Fairbairn, said. “The levy is too narrowly defined. It covers only one type of training and employers can only reclaim off-the-job costs. As a result, valuable forms of training risk being cut back, with quantity put ahead of quality.”

More measures announced

Other key measures include:

  • Businesses that do pay the levy (ie with a paybill of over £3m) will be eligible for a top up of 10% every month. The D of E says, though, that if those businesses don’t have enough in their levy account then they will also receive the remaining 90% of the costs.
  • A £2,000 incentive to help 16-to 18-year-olds, young care leavers and young people with an Education and Health Care (EHC) plan, make their first step into the world of work. The split will see £1,000 to employers and £1,000 to training providers.
  • A new online calculator will be set up to help businesses work out their costs and obligations.
  • As predicted in the consultation, the government will set up a new register of apprenticeship training providers to come into effect in April 2017.
  • Employers will be able to register to create your account from January 2017 and they will be able to familiarise themselves with the service.
  • The digital apprenticeship service will support the English apprenticeship system. Scotland, Wales and Northern Ireland have their own arrangements for supporting employers to access apprenticeships.
  • As laid out in earlier consultations, existing and new apprenticeship frameworks and standards will be placed within a funding band. The upper limit of each funding band will cap the maximum amount of digital funds an employer who pays the levy can use towards an individual apprenticeship. 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.
  • Employers that recruit an apprentice with additional learning needs (such as dyslexia), or other learning difficulties or disabilities, the government will make a payment directly to the training provider to help them with the extra costs of supporting the apprentice’s learning.
  • No confirmation yet on the rules surrounding redirecting levy funds to other employers – the DofE says it is “Seeking views on proposals to allow employers to transfer 10% of their funds to another employer’s digital account from 2018.”
  • Levy-paying employers that are planning to spend more on staff training than the funds in their digital account will get 90% of  additional costs funded by government.

In terms of industry reaction, Mark Dawe, chief executive of the Association of Employment and Learning Providers (AELP) said the announcement was, at the very least, welcome in its timing: “Any delay would have made the task very difficult,” he said.

“It’s good that we now have new information on the levy for employers,” he continued. “As the programme’s lead salesforce, our provider members have been playing a huge role in explaining the government’s reforms to employers and businesses say they really need the details that have been issued today. Working in partnership with employers, we can now get on with the job of ensuring that the levy starts off well.”

Ben Rowland, key account director at Arch Apprentices, which provides Arch Levy Services, said that there was now work to be done by businesses – but those that don’t panic will be able to make the most of the levy.

“If you approach the levy with intent, then you have nine months to deal with it. There are well-established programmes in place and training providers to help.”

‘Firms can only compete with the right skills’

Robert Halfon, the newly appointed Apprenticeships and Skills Minister said today: “We need to make sure people of all ages and backgrounds have a chance to get on in life. Apprenticeships give young people – especially those from disadvantaged backgrounds – a ladder of ‎opportunity. That’s why we continue to work tirelessly to deliver the skills our country needs. The apprenticeship levy is absolutely crucial to this.

“Our businesses can only grow and compete on the world stage if they have the right people, with the right skills. The apprenticeship levy will help create millions of opportunities for individuals and employers. This will give our young people the chance they deserve in life and to build a highly-skilled future workforce that the UK needs.”

There was confirmation that further details on funding in particular will be forthcoming in October.