The government has released further details on the levy and how it’s going to work from April/May 2017 – we’ve summarised the key information you need to know below.

It appears that some changes and concessions have been made to certain aspects following the consultation round, subsequent analysis and a touch of press campaigning.

In total, 9 documents have been released, covering a multitude of aspects surrounding the levy, funding and associated policy.

High level overview

• Higher funding for STEM apprenticeship frameworks and higher pricing of apprenticeship standards to support improved quality, and greater flexibility to train those with prior qualifications.

• Longer period of time for employers to spend funds in their digital account, now with 24 months before they expire (an increase from the 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, with a new employer group including the Confederation of British Industry, Federation of Small Businesses, British Chambers of Commerce, Charity Finance Group and EEF – the Manufacturers’ Organisation – to help government develop this system so that it works for employers.

• 90% contribution from government to the cost of training for employers that will not pay the levy.

• 100% contribution from government to the cost of training for small employers that will not pay the levy and that take on apprentices who are 16 to 18 years old, 19 to 24 year old care leavers or 19 to 24 year olds with an Education and Health Care Plan.

• £1,000 each from government to employers and training providers when they take on 16 to 18 year olds, 19 to 24 year olds who were in care or who have an Education and Health Care Plan.

• Help for training providers to adapt to the new, simpler funding model through an additional cash payment equal to 20% of the funding band maximum where they train 16 to 18 year olds on frameworks.

• A simplified version of the current system of support for people from disadvantaged areas to ensure the opportunity to undertake an apprenticeship is open to everyone, no matter where in England they live, their background or family circumstances.

There are also 3 reports covering the following aspects alongside the technical documents:

• The Apprenticeships Levy: how will employers respond?
• Apprenticeships for 16-18 year olds: the cost of providing.
• Equality analysis: Apprenticeships funding policy from May 2017.

Apprenticeship funding in England from May 2017

The policy has been adapted in response to feedback on initial proposals published in April and then August.

Throughout this time, the DfE has engaged with employers, training providers and interested stakeholders to inform and adapt the policy development.

Funding of frameworks delivered to 16-18 year olds

• In addition to the price that the employer and provider agree for training to 16-18 year olds on a framework, the provider will also receive a transitional payment from government equivalent to 20% of the funding band maximum for that framework.
• The uplift will also apply to 19-24 year olds who were formerly in care or who have an Education and Health Care plan.
• The DfE is retaining, for both employers and providers, the £1,000 payment for taking on a 16-18 year old on an apprenticeship framework or standard, as well as 19-24 year olds who were formerly in care or who have an Education and Health Care plan.

Additional support in areas of disadvantage

• The DfE will retain, for frameworks only, a simplified version of the current system and provide at least the same level of funding to support those from disadvantaged areas for one year, whilst a fuller review into the best way to support individuals from all backgrounds into apprenticeships takes place.
• Providers will receive an additional:

                       -£600 for training on a framework an apprentice who lives in the top 10% of deprived areas

                       -£300 for any apprentice who lives in the next 10% of deprived areas, and

                       -£200 for those in the next 7%.

• Overall, government will make available at least the same amount on disadvantage payments as under the current system of more complex uplifts.
• These payments will come direct from the government and will not be deducted from an employer’s digital account.
• This will be in place for the first year and the DfE will work with Opportunity Areas to develop and test different approaches.

Expiry of funds in digital accounts

• The DfE will extend the expiry period, so that funds in digital accounts, including top-ups, will expire after 24 months unless they’re spent on apprenticeship training to support employers to adapt and expand their apprenticeships programmes as well as prepare for the new system.

Start date for the new apprenticeship funding system

• The start date for the new apprenticeship funding system will be 1 May 2017. Any apprenticeships started from this date will be funded according to the new rules.
• The Apprenticeship Levy comes into effect on 6 April 2017, but funds will not appear in an employer’s digital account until just before the end of May.
• The first payments to providers for apprentices with levy-paying employers who start in May will be made in June.
• Providers will claim directly from government for apprentices who start after 1 May and are employed by employers who do not have a digital account. First payments also in June.

Determining the funds that will enter digital accounts

• The amount of government subsidy that an employer paying the levy will be able to access is linked to the value of an employer’s contributions, the proportion of employees working in England and a government top-up.
• Once employers have declared the levy to HM Revenue and Customs (HMRC) they’ll be able to access funding for apprenticeships through DAS.
• Employers will be able to register for an account from January 2017.
• HMRC will work out what proportion of each employer’s pay bill is paid to employees living in England for each PAYE scheme.
• The calculation will first be run in February 2017 and subsequently run quarterly in July, October, January and April each year.
• Employers will also benefit from a 10% top-up to monthly funds entering an account.

Directing funds in a digital account to another employer or to Apprenticeship Training Agencies (ATAs)

• The DfE knows that there are employers who’ll want to support their supply chain or other employers in their sector or community, by transferring funds from their digital account, and is committed to introducing this in 2018.

Funding bands

• The new apprenticeship funding system will be made up of 15 funding bands, with the upper limit of those bands ranging from £1,500 to £27,000.
• All existing apprenticeship frameworks and standards have been placed within one of these funding bands and new standards will be placed in a funding band as they become ready for use.
• The upper limit of the funding bands will also cap the maximum price that government will ‘co-invest’.
• Funding bands do not have a lower limit because the DfE does not want to prejudge what is the correct price for a provider and employer to settle on.

• Each individual framework pathway has been placed into a single funding band. Each pathway is put in the nearest funding band, based on the current rate of funding the government pays providers for training adult apprentices.
• STEM framework pathways in 13 sector subject areas: Engineering and Manufacturing Technologies; Information and Communication Technology; Science and Mathematics; and Construction, Planning and the Built Environment have been adjusted and the current government-funded adult rate increased by 40% at Level 2 and 80% at Level 3 and above.
• Where relevant apprenticeship standards have been allocated higher funding bands than frameworks as they are higher quality, more rigorous and so more expensive to deliver.

Timing of payments by government to providers

• 80% of the negotiated price will be paid on a monthly basis, spread evenly across the period of the apprenticeship as soon as evidence of delivery occurs through monthly returns.
• The remaining 20% will be paid at the end of the apprenticeship, to be paid on successful completion by the apprentice.

Co-investment

• If an employer has not paid the levy and would like to train an apprentice, they will need to co-invest 10% and will benefit from government funding to cover the remaining 90% of the cost.
• This will also apply to any levy-paying employer that wants to invest more in apprenticeship training than it holds in its digital account.

Small employer co-investment waiver

• Employers with fewer than 50 people working for them will be able to train 16 to 18 year old apprentices without making a contribution towards the costs of training and assessment up to the funding band maximum - the government will pay 100% of these costs.

Training younger apprentices

• When employers take on a 16 to 18 year old on an apprenticeship framework or standard, they will receive £1,000 to help meet the extra costs associated with this. This will be paid to employers in two equal instalments at 3 months and 12 months.
• Initially, these payments will be made to employers via their training provider but will move to a system where the employer receives this payment directly from the government.
• Employers that benefit from the small employer co-investment waiver will also receive these payments.

Support for care leavers and those who have an Education, Health and Care plan

• Employers that train an apprentice who is aged 19 to 24 and has previously been in care, or who has a Local Authority Education, Health and Care plan, will receive £1,000 to help with the additional costs associated with this.
• Employers with fewer than 50 people working for them will not be required to contribute the 10% co-investment; instead the government will pay 100% of the training costs for these individuals.

Training younger apprentices and support for care leavers and those who have an Education, Health and Care plan

• Providers will also receive the same additional £1,000 payment as employers for supporting those apprentices who are aged 16 to18, or 19 to 24 and are either a care leaver or have a Local Authority Education, Health and Care plan.
• This will be on top of the funds providers receive for core training.

English and maths

• When employers agree with their provider that their apprentice needs training to meet this minimum standard of English and maths at Level 1 and, if possible, Level 2, the provider will be able to claim a flat rate of £471 from the government to deliver each qualification.
• These payments will come direct from the government.

Learning support

• Providers will be able to claim costs from government up to an additional £150 each month for apprentices with a learning or other disability, who may require extra learning support to achieve their apprenticeship.

Funding apprentices who work in England

• The DfE will apply a single test for whether apprenticeship training can be funded through the English system based on whether their workplace is within England.
• If it is, then employers will be able to use the funds in their digital account to pay for training, or access government co-investment, regardless of whether the apprentice lives in England or not.
• Exceptions to this rule are Armed Forces, Royal Fleet Auxiliary and those who undertake significant travel outside of the UK.

Funding apprentices with prior qualifications

• Employers will be able to use funds in their digital account, or access government co-investment support, to train any eligible individual to undertake an apprenticeship at a higher level than a qualification they already hold, including a previous apprenticeship.
• Further guidance on what types of training will meet these requirements will be set out in the detailed funding rules issued by the Skills Funding Agency.

To support this there are also 3 supporting technical documents and 2 interactive spreadsheets showing funding bands per framework, pathway and standard.

If you’re interested in reading more, visit https://www.gov.uk/government/publications/apprenticeship-funding-from-may-2017 and https://www.gov.uk/government/publications/apprenticeship-funding-and-performance-management-rules-2017-to-2018.

Feel free to get in touch with us if you have any questions.