Government reveals further details on apprenticeship funding worth £2.5bn

25 October 2016 -

Announcement includes an increase to the amount of time employers have to use their funding, and incentives for taking on young apprentices and those from under-privileged backgrounds

Matt Scott

CMI has welcomed an announcement from the government that has outlined further details of the incoming Apprenticeship Levy, which sets government funding for the initiative at £2.5bn.

It provides confirmation that the training costs of young people will be fully covered for smaller employers, as well as additional funding for apprenticeships for young people, and a longer time-frame for employers to use their funding credits.

The announcement is welcome news at a time of renewed focus on upskilling the UK, as Brexit continues to fuel concerns about future access to top-level international talent.

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Data from the Department for Business Innovation and Skills revealed that incompetence or bad management of company directors causes 56% of corporate failures.

Petra Wilton, CMI’s director of strategy, said the announcement was another positive step in professionalising the UK’s workforce.

“Giving employers extra time to spend Levy funds and incentives to take on 16-24-year-olds will be a great boost to increasing the number of apprentices the UK so desperately needs,” she said. “A recent CMI survey of over 1,000 managers showed strong support for the Apprenticeship Levy, and 80% of managers agree there needs to be far greater investment in higher level skills to meet the massive economic and employment challenges that we’ll face post-Brexit.

“Bad management currently costs British businesses £84bn a year in lost productivity, leaving us lagging behind our G7 competitors. We clearly need to use the opportunities of the levy to ensure that we have the future skills such as management and digital that employers are crying out for.”

Skills minister Robert Halfon said: “Apprenticeships work. The reforms we are rolling out will guarantee support from employers and government, so that millions of people can get the apprenticeships, skills and jobs for the future.

“Our apprenticeship levy will boost our economic productivity, increase our skills base and give millions a leg up on the ladder of opportunity – over 90% of apprentices currently go into work or further training.”

“Making Britain a world leader on apprenticeships is essential if we truly want a country that works for everyone,” he added.

Degree Apprenticeships for all levels in an organisation

Government approval to develop a new Master’s-level degree apprenticeship in leadership and management means organisations will also be able to use Apprenticeship Levy funds to invest in the skills of their most senior leaders.

The apprenticeship will be designed by employers to develop the skill sets of those working in private, public and not-for-for-profit sectors with responsibility for directing the operations of companies or third sector organisations, government departments or local authorities, and formulating national and local government policy.

It adds to the Chartered Manager Degree Apprenticeship, which was launched in November 2015, and the team leader and operational manager apprenticeships launched in June 2016, providing a progression route for employers to invest in managers at all levels.

“The likes of Chartered Manager Degree Apprenticeship will give both school leavers and existing workers alike the chance to get a degree, professional accreditation and work experience to kick-start their careers in management,” Wilton added.

To ensure higher quality apprenticeships, the government has also introduced a new Register of Apprenticeship Training Providers, which opens today.

All providers on the register will have to pass quality and financial tests. Those with an “inadequate” Ofsted rating for apprenticeship provision will not be eligible to apply to the register.

See below for full details of today’s announcement

• 100% of training costs will be paid by government for employers with fewer than 50 employees who take on apprentices aged 16 to 18 years old. This will also apply to smaller employers who take on 19 to 24 year olds who were in care, or 19 to 24 year olds with an Education and Health Care Plan.
• £1,000 each from government to employers and training providers who take on 16 to 18 year olds and 19 to 24 year olds who were in care or who have an Education and Health Care Plan.
• Providers that train 16 to 18 year olds on apprenticeship frameworks will be given an additional cash payment equal to 20% of the funding band maximum in order to help them to adapt to the new, simpler funding model.
• Providers that train apprentices from the most deprived areas on apprenticeship frameworks will continue to receive additional funding from government. More than £60m will be invested in supporting the training of apprentices from the poorest areas in the country, equalling around one third of all apprentices.
• Employers will have longer to spend funds in their digital account, now with 24 months before they expire, an increase from government’s original proposal of just 18 months.
• A commitment to introducing the ability for employers to transfer digital funds to other employers in their supply chains, sector or to Apprenticeship Training Agencies in 2018.
• More funding for STEM apprenticeship frameworks and higher pricing of apprenticeship standards to support improved quality, and providing greater flexibility to train those with prior qualifications.

Find out more about how CMI can help you with your apprenticeship needs