This article has been updated for 2017.
The way apprenticeships work, including the way they’re funded, has changed. The government says that the recent reforms “will support an increase in the quality and quantity of apprenticeships.”
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Changes to apprenticeship funding
The government plans to increase apprenticeship funding to £2.5 billion by 2020, so they’ve brought in the apprenticeship levy to pay for this.
What is the apprenticeship levy?
Introduced in April 2017, the apprenticeship levy is charged at 0.5 per cent of a company’s annual pay bill. It’s paid to HMRC through the PAYE process.
Employers get an annual apprenticeship levy allowance of £15,000 to offset against the charge. This effectively means that only employers with an annual pay bill of over £3 million have to pay the levy.
The government says that “the vast majority of employers” won’t be eligible to pay the levy, but will continue to benefit from government support for apprenticeship training.
Apprenticeship funding for smaller employers
Smaller businesses that don’t pay the levy will share the cost of training and assessing apprentices with the government. The business pays 10 per cent towards the cost, and the government pays the rest, up to the funding band maximum.
The online apprenticeship service
Another change to the apprenticeship system is the introduction of a new online service.
The online apprenticeship service allows levy-paying employers to financially manage their apprenticeship programme. Employers can use it to estimate their spend and recruit apprentices through training providers.
Smaller businesses that don’t pay the levy can’t currently use the online service, but it should be available to them in the future.
Changes to the apprenticeship system
The government has also tried to simplify the system, to “make it easier for employers of all sizes to navigate and choose the apprenticeship funding they want to purchase.”
The new system is designed to be employer-led rather than provider-led, and to encourage providers to be more responsive to what employers want.
What do you think about the apprenticeship changes? Tell us in the comments.