The apprenticeship levy: What do we know so far?

Today, the CBI’s Director General Carolyn Fairbairn gave a speech on the Government’s apprenticeship levy, in particular around the need for the Government to collaborate with industry on its design if it is to deliver the quality skills training needed.

The UK’s Aerospace, Defence, Security and Space sectors lead the way on high-quality apprenticeships. Companies in these sectors employ more than 9,000 high-quality apprentices and are increasing investment to make sure they have the skills needed for the future.

The introduction of an apprenticeship levy is a significant change in approach and needs careful design to ensure it encourages all businesses to offer the high quality apprenticeships our economy needs. It is important that what’s implemented is fair, flexible and business-led.

So what do we know so far?

Although there’s still quite a lot we don’t know, last week the Government published updated guidance last week including details about the new digital apprenticeship service accounts.

Here is a quick summary:

The digital apprenticeship service account

  • Access to funding for apprenticeships will be available through a new digital apprenticeship service account to pay for training and assessment of apprenticeships in England.
  • Employers (or a group of companies) can register for an account from January 2017 and levy-paying employers will be able to use the service to pay for training and assessment of April 2017, when the levy comes into force.
  • Non-levy paying employers will not need to use the service until at least 2018 and all employers will be able to use it by 2020.

How the account will work

  • Funds will appear in the digital account ‘a few working days’ after confirming pay bill and levy contributions to the HMRC for the previous month. This means an employer will see funds in their digital accounts for the first time in late May 2017.
  • Funds will expire 18 months after they enter the digital account unless they are spent on apprenticeship training.

What employers will be able to purchase through the account

  • Employers will have to select an apprenticeship standard or framework, choose an approved training provider to deliver the training, choose an assessment organisation and post-apprenticeship vacancies.
  • Employers will be able to see funds available, set the price agreed with the training provider and pay for apprenticeship training and assessment. However, they will not have enough funds in their account to pay for an entire training programme, so monthly payments will be taken from the account over the course of an apprenticeship.

Support for extra costs

  • Government support will be available in cases where funds in the digital account are not enough to cover the full cost of an apprenticeship, or where the apprentice has additional needs or requires English and maths training.

What will we know next?

Further details on the apprenticeship levy will be published in June, October and December this year. Of particular importance for ADS members are:

  • The funding bands setting the maximum amount of funding available for each apprenticeship.
  • The level of government support available towards the cost of apprenticeship training for non-levy paying employers (e.g. supply chain companies).
  • Eligibility rules setting who employers can spend apprenticeship funding on and where.
  • More information on who can provide apprenticeship training and how employers can set themselves up to deliver apprenticeship training.
  • Details of how the levy will apply to the devolved regions of Scotland, Wales and Northern Ireland.
  • Further employer guidance from HMRC on how to calculate and pay the apprenticeship levy.

Read a summary of the new guidance here.