Recent changes to apprenticeship funding, explained

Posted on: 2016-12-12

Stephen Bartle, Head of Apprenticeship Management

As I’m sure you’re all aware, apprenticeship funding is changing in spring 2017 through the introduction of the Apprenticeship Levy in April and a new simplified funding model in May. Recently, the Education Secretary, Justine Greening, released an update on these funding reforms in response to initial feedback from UK employers and apprenticeship providers. The Levy is expected to be implemented as planned and will be paid by all employers with a pay bill of over £3M.

Here is what the recent updates mean for employers and providers delivering either apprenticeship frameworks or the new apprenticeship standards:

  • An extra 20 per cent of the funding band limit for 16-18 year-olds: it was highlighted that moving to a ‘simplified’ single funding level might cut 16-18 rates – so to help providers adapt to the new system, an additional cash payment has been introduced as a transitional measure when training a 16-18-year-old on a framework; this is in addition to an extra £1,000 which will be paid to both the employer and provider for supporting an apprentice aged 16-18.
  • 100 per cent funding for small employers with under 50 staff: employers with less than 50 staff who will not be paying the Levy will not have to make a 10 per cent contribution to the cost of the apprenticeship for 16-18-year olds. It will be fully funded by the Skills Funding Agency. 
  • £60m of additional support in areas of disadvantage: there will continue to be more funding for apprentices who live in the most deprived areas, ensuring that everyone regardless of background or ability – has the opportunity to benefit from an apprenticeship.
  • Expiry of funds in digital accounts extended from 18 to 24 months:
    The proposal was that employers would lose access to their Levy funding if it wasn’t used within 18 months – but a longer 24 month period will help employers prepare for the new system and adapt their training programmes.

With a constant need for new infrastructure and property alongside an increasing requirement for skilled workers, the changes to this funding model, alongside opening up apprenticeships to anyone aged 16 or over, may broaden participation in the industry and make it easier than ever for employers to hire and train apprentices.

The Apprenticeship Levy is a powerful incentive for companies to offer apprenticeships to new starters, to integrate them into the business and train them up, but it also provides the opportunity to progress the existing workforce who may want to become further qualified. Under the new funding model, prior qualifications at an existing or higher level will not be a barrier as long as the apprenticeship allows the student to acquire substantive new skills. For those considering an apprenticeship, the recent updates allow for a more accessible route into a profession whilst gaining valuable work experience.

At UCEM we hope that the amendments will encourage more companies to take on apprentices – and benefit from the many advantages that apprenticeships offer both young people and employers. And in light of this week’s Autumn Statement – which signified an additional 140,000 homes a year and more than double annual capital spending on housing – we need highly skilled workers entering the Built Environment more than ever.