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Summer Update of the Apprenticeship Levy

During August the government has released their overdue update to the introduction of the levy from April 2017 and the changes to apprenticeships commencing from 1st May 2017. For those of you who have not seen the information please read on and use the links for the updated documents and information.

The government are currently consulting on their plans and employers and training providers can complete the consultation by 5th September 2016 funding-proposals. Further updates in October may take responses received to the consultation in to account.

Main points –

  1. Non levy paying employers will pay 10% of the cost of an apprenticeship and the government the remaining 90% instead of the current pilot amount of one third/two thirds. Employers with fewer than 50 employees will not have to pay anything towards the cost of training a 16 to 18 year old apprentice, young care leaver or young person with an EHC plan.
  2. There will be a £2,000 incentive to help 16 to 18 year olds and 19-24 young care leavers and young people with an Education and Health Care (EHC) plan, make their first step into the world of work – split £1,000 to employers and £1,000 to training providers. Payment is expected to be made at the three months and twelve months points.
  3. Providers will receive up to a further £150 per month for learners who require additional learning support for example for dyslexia and disabilities.
  4. Training providers will receive a payment of £471 for learners who are required to successfully complete Maths and English to Level 1 and Level 2 to achieve their apprenticeship. Employers whether levy paying or non-levy paying, will not have to contribute towards learners undertaking Levels 1 and 2 qualifications in Maths and English.
  5. Levy paying employers - those with annual payroll bills over £3m (or a payroll bill of £250,000 per month), will receive a 10% monthly top-up to their funds. However, if their levy account is insufficient to fund apprenticeships (or runs out) then like smaller employers, 90% per cent of their additional apprenticeship training costs will be subsidised by the government after they have paid the first 10%.
  6. All apprenticeship frameworks and standards (see previous blog of 2nd March 2016 for additional explanation or refer to the documents on the government’s website via the links below), will move from the current 6 “cap” bands in to one of 15 funding bands. These range from £1,500 for Band 1 to £27,000 for Band 15. It will be up to employers to negotiate the price of training their apprentice with their chosen training provider.
  7. The changes will now commence on 1st May 2017 for everyone. The date change is because PAYE data for April 2017 (when the introduction of the levy begins) will be collected in May and the digital funds for the first levy payers will be available from late May. Funding is paid in monthly arrears so the first payments for training apprentices starting on or after 1st May 2017 will leave digital accounts in June 2017. The 1st May 2017 is also the date when non levy paying employers will start paying their finalised amount of contribution (to be confirmed as 10% and 90% and published in October 2016).

For employers who expect to pay the levy the government has launched an online calculator for them to see how the levy and funding system will work for them.

Who will deliver apprenticeships post May 2017 –

All training providers wishing to deliver apprenticeships either colleges, independent training providers or employer providers must apply to be on the Register of Apprenticeship Training Providers (RoATP) list due to be published April 2017. At the moment the government’s requirement is that all current apprenticeship providers should have a Grade 1 to 3 by Ofsted for their apprenticeship delivery to be eligible for the register. Once on the register providers will need to contract with the SFA (Skills Funding Agency) to be able to draw down funding.

Large employers who will pay the levy may wish to become employer providers to deliver and be paid for their own apprenticeship training if approved by the SFA.

The Register of Apprenticeship Training Providers (RoATP) should open for applications in October 2016. Only those organisations approved on the Register will be able to deliver apprenticeship training post May 2017.

Independent training providers who currently receive funding by subcontracting with a large training provider will have to apply for approval for inclusion on the register.

The government’s guidance document for employers looking to apply to the new register to become “employer providers” can be accessed with the following link – Provider Guide Aug 2016

The government’s guidance document proposal for a Register of apprenticeship Training Providers can be accessed with the following link - Training Providers

An updated version of the government’s document on the levy and how it will work can be accessed here – How it will work

Apprenticeship Funding -

As mentioned above from 1st May 2017 all new starts on frameworks or standards will be funded in one of the 15 bands instead of in the current 6 caps. Funding for standards is usually higher than the frameworks they replace because they are more expensive to deliver and assess.

Proposed funding bands -

Number Band Upper Limit
1 £1,500
2 £2,000
3 £2,500
4 £3,000
5 £3,500
6 £4,000
7 £5,000
8 £6,000
9 £9,000
10 £12,000
11 £15,000
12 £18,000
13 £21,000
14 £24,000
15 £27,000

The proposed funding bands for individual apprenticeship standards – spreadsheet can be accessed here - Spreadsheet

The government are considering (and consulting) on holding back 20% of funding for the end point assessment. Employers may not be aware that a proportion of funding is currently held until a learner has successfully completed their qualification, however, the proposal is that funding is retained until the apprentice has completed the end point assessment whether or not they successfully achieve their apprenticeship.

Whilst assessment organisations have been (and are being) appointed to undertake the End Point Assessments their costs have not yet been decided. It is expected that assessments for the top bands might run to around £4,000 and for some qualifications in top bands (such as IT) the assessment might last a week. It will, therefore, be important to have a complete breakdown of all costs when negotiating prices.

It is expected that non levy paying employers will be able to access their own digital accounts from 2018/19. Until these are in place funding for your apprentices will be made to providers on the RoATP who have contracts with the SFA (Skills Funding Agency).

The latest version of the government’s funding document can be accessed here – Funding Proposals from May 2017

Funding from 1st August 2016 –

Current SFA funding will mainly be available for –

  • Framework apprenticeships
  • The new apprenticeship standards – an employer makes a one third contribution to the cost (until the introduction of the levy see above)
  • 19+ learning loans (age lowered this year from 24+)
  • English, Maths, ESOL etc.

All other training will need to be purchased on a commercial basis.

A further update on the implementation of the levy and changes to apprenticeships is due out in October 2016.

Sue Yates 30th August 2016

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