Apprenticeship levy’s new and improved model unveiled

October 26, 2016 / Isla MacFarlane
Apprenticeship levy’s new and improved model unveiled

Critics of the apprenticeship levy had called the scheme inflexible, and voiced concerns it would exclude small businesses, Britain’s poorest areas and disadvantaged teenagers. However, the final funding policy has been unveiled with its detailed fine-tuned to the industry’s needs.

Employers will have a longer period of time to spend funds in their digital account to allow for recruitment and training cycles. In the original proposals, funds expired after just 18 months – this has been extended to 24 months.

Crucially for the construction industry, where two thirds of apprentices are trained by SMEs, employers will also be able to transfer digital funds to other employers in their supply chains, sector or to apprenticeship training agencies in 2018.

“As long as larger contractors are unable, or unwilling, to play a greater role in industry training, then it’s vital that funds can be rerouted to smaller firms,” said Brian Berry, Chief Executive of the FMB. “The severity of our industry’s skills shortage means that we need to ensure that every single penny of Apprenticeship Levy that is extracted from the construction sector is reinvested in high quality construction apprenticeships.

“We had some concerns that if larger companies were not able to pass their vouchers onto smaller firms, the money would be left languishing in the general pot before eventually being spent by other sectors. Now it’s a question of ensuring that the digital voucher model is simple and easy for small firms to navigate.”

The changes also include an extra 20% of funding to train 16-18 year olds and more money for employers to train apprentices in the poorest parts of England. There is also additional funding for employers who take on apprentices under 24 years old who are in care or have special needs.

“The Government have had to make a major U-turn to their original proposals for funding apprenticeships which would have disadvantaged tens of thousands of 16-18 year olds young people, colleges and providers,” said Gordon Marsden MP, Labour’s Shadow Minister for Apprenticeships.

“However, there still remain big question marks over the Government’s apprenticeship targets and policies, and we need to see the detail on transitional funding for disadvantaged areas,” he added.

The new apprenticeship levy will be introduced in April 2017, despite warnings that this will not leave enough time to finalise the scheme. The levy will be set at 0.5% of pay bill and only employers with a pay bill of more than £3 million will have to pay the levy.

Employers that are not eligible to pay the levy will continue to receive government support towards the costs of apprenticeship training and assessment.

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