The Government currently contributes towards the cost of training and assessment of apprentices. For every £1 an employer pays towards the cost of training and assessment, the Government will pay £2. In addition there are employer incentive payments (for taking on a 16- to 18-year-old, for small businesses and for successful completion).
As with all apprenticeships, apprentices must not pay the costs of training or assessment and should not be charged any student fees within their apprenticeship.
All apprenticeships are allocated to one of the funding bands by the Skills Funding Agency. The overall amount the government contributes will depend on which funding band that the apprenticeship has been allocated to.
Starts from May 2017 will either be funded from an employer’s Digital Account (levy paying employers) or from Government with 10% contributed towards this by the employer (non-levy paying employers and also those levy paying employers who have spent the funds in their Digital Account).
All apprenticeships are allocated to one of the funding bands by the Skills Funding Agency. The overall amount the government contributes will depend on which funding band that the apprenticeship has been allocated to. Providers and employers can negotiate and agree a fee within the band.
- Team Leader/Supervisor (Level 3) - Funding band 7- £5,000
- Operations/Departmental Manager (Level 5) - Funding band 9 - £9,000
- Chartered Manager Degree Apprenticeship (Level 6) - Funding band 15 - £27,000
- Senior Leader Master’s Degree Apprenticeship (Level 7) - Funding band to be confirmed in 2019
The Government has introduced an apprenticeship levy that will come into effect on April 6th 2017. This system will replace the current funding system. The levy applies to UK employers in both the private and public sector with an expected pay bill of more than £3 million. The levy will be charged at 0.5% of the employers’ entire annual pay bill. However employers will have a levy allowance to offset against this. The levy allowance is worth £15,000. This means that the amount that employers will have to pay is 0.5% of their pay bill minus £15,000.
For example – an employer expects to pay £40,000 based upon 0.5% of their pay bill. Taking the £15,000 allowance into consideration £40,000 minus £15,000 means that they will only need to pay £25,000.
The levy will be collected by HMRC by monthly payments through PAYE and will be paid into a Digital Account for the employer to spend on training and assessment for apprenticeships. Note that employers must use a training provider that is shown on the Register of Apprenticeship Training Providers.
It is anticipated that less than 2% of employers will actually pay the levy. Employers in England who pay the levy and are committed to apprenticeship training will be able to get out more than they pay in to the levy through a ‘top up’ of 10% to monthly funds entering levy paying employers digital accounts, for apprenticeship training in England, from April 2017. All funds entering a levy payer’s account will be increased, so every £1 will be increased to £1.10 in value. Funds in the Digital Account expire after 24 months so employers will lose these if they are not spent.
Non-levy paying employers must contribute 10% towards the apprentice’s training and assessment (payable to the training provider). The Government contribute the other 90%. This also applies where a levy paying employer has spent the funds in their Digital Account.
Additional incentives are in place for both level and non-levy paying employers to take on apprentices aged 16-18 years of age.
From May 2017:
- For taking on 16-18 year olds – £1,000 payable to both the employer and the provider
- English and Maths where required funded at £471 each. The level depends upon what is stated in the Standard but unless specified could be either functional skills or GCSE, and will fund both levels 1 and 2 separately
- No separate funding/ additional payment where ICT is a requirement of the Standard – this must come out of the funding band
- 19-24 payment where formerly in care
- Additional learning support up to £150 per month based upon evidence of need