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New funding rules for apprenticeships announced.

By Chris Ash on Dec 19, 2016 7:12:00 PM

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Finally, the long awaited apprenticeship consultation has been evaluated and the Government has published its rules around the apprenticeship levy and apprenticeships in general post April 2017.  This post is a must read if you are either a large employer who will pay the levy or a smaller employer considering or currently investing in apprenticeships.


I would recommend reading the full guidance as there is too much to fully detail here so what you see below is a summary of the key points. Future posts will try to address some of these subjects in more detail.


  1. Employers that take on a 16 – 18 year old on an apprenticeship framework or standard will receive a £1000 incentive payment (this will also apply to 19 – 24 year olds who were formerly in care or who have an Education and Health Care plan.


  1. Large employers will pay the apprenticeship levy and will be able to spend funds in their digital account from 1st May 2017. Smaller, non-levy paying employers will be required to make a 10% financial contribution towards apprenticeship frameworks or standards.


  1. Funding bands have been set that outline the maximum contribution payable by Government for each apprenticeship framework or standard. Employers have the option to negotiate on price where a contribution is required. (this include levy and non-levy payers).


  1. Funds in large employers digital accounts will have an extended expiry period, so that funds in digital accounts, including top-ups, will expire after 24 months unless they are spent on apprenticeship training. 


  1. Apprenticeships that start before the 1st May 2017, will not affect your digital account balance or require a future contribution if you are a small employer.


  1. Funding in your apprenticeship levy account can only be spent on employees who work in England. Separate arrangements will be in place for Scotland and Wales.


In addition to the key points above there are many other points to consider that cannot be fully addresses here. Employers should consider such things as NI exemptions for younger apprentices and the impacts of the 2.3% apprenticeship target if you are a public sector employer.


But don’t just explore the apprenticeship reforms in isolation. Consider the costs vs benefits of investing in apprenticeships against a backdrop of continued spiralling employee costs such as National Living Wage and pension contribution increases.


I still personally still think the reforms will be beneficial to business (although I am not the Finance Director) and we believe that we can demonstrate to all employers that despite the apprenticeship levy, the mandatory 10% contributions and the rising employee costs they will see a positive financial return from these reforms if they seem them as an opportunity and not just another cost.


Chris Ash

Written by Chris Ash