Jul 1ST

July reform update

Last month the apprenticeship team outlined some of the changes that were being introduced from April 2017 as part of the apprenticeship reform programme.  The government was due to provide further details on these reforms by the end of June. However Skills Minister Nick Boles has admitted that there will be a “little delay” following the decision to leave the European Union although it is hoped that this information will be available by mid-July.

However it is clear that there is a commitment to the apprenticeship reform and the introduction of the apprenticeship levy from April 2017 so below is a summary of what we do know.

  • From April 2017 employers with a pay bill of more than £3 million will be charged an apprenticeship levy at a rate of 0.5% of their pay bill.  This will be collected by HMRC through the PAYE process. 
  • There will be an allowance of £15,000 offset against the levy which effectively means that payment will only be made for the portion of the pay bill in excess of £3 million
  • This levy payment will be available to reinvest into new apprenticeship training on an approved apprenticeship standard or framework. 
  • Levy-paying employers will need to register and create a digital account from January 2017 to be able to access levy funds and allocate these to apprenticeship training.
  • Employers that do not fall into the scope of the apprenticeship levy will still be expected to make an investment to the cost of apprenticeship training which will be in the form of a cash contribution.
  • For non-levy paying employers there is an expectation that employers will make a small contribution for all apprenticeship training with the remainder of funding provided by the government.  The current transitional arrangements are set at £2 government contribution for every £1 employer contribution although it was reported this week the government is looking at a making a much bigger contribution after April 2017.
  • The current suggestion is that for every £1 invested by non-levy employers, the SFA will pay up to £9 although confirmation of exact rates and rules for this ‘co-investment’ should be in the promised July update.   
  • All current apprenticeship frameworks will be placed into ‘funding bands’ which will show the maximum amount of funding available for each apprentice from April 2017.  The new apprenticeship standards already have a funding cap allocated, ranging from £3,000 for cap 1 up to £27,000 for cap 6.
  • It is still anticipated that there will be additional support provided for employing a 16 to 18 year old apprentice to allow for the additional supervision and training required.

However these changes only affect new apprenticeship starts from April 2017.  If you take on an apprentice before this date then they will be funded using the current system for the duration of their apprenticeship training.  There has never been a better time to invest in building the skills required for your business.  Apprenticeships can enhance your workforce and introduce a fresh perspective to your business. 89% of employers say they make their business more productive, 75% of apprentice employers say the programme has helped cut recruitment costs and 80% say that apprenticeships will play a bigger part in their future recruitment plans. Also 81% of consumers favour companies that employ apprentices. 

If you would like to recruit an apprentice before these changes come into effect please contact the apprenticeship team on apprenticeships@moulton.ac.uk or on 01604 673575.  Also please follow the team on twitter @MoutonWBL for further updates on the funding changes.

If you would like to discuss how the apprenticeship levy and reforms may impact on your business after April 2017 then please contact the Apprenticeship Programme Leader, Georgina Burton (georgina.burton@moulton.ac.uk).  Moulton College can help you to understand how a future apprenticeship programme could be developed to suit your business needs and address any skills shortages that you may be experiencing.  There is also still time to get involved with employer groups to develop new apprenticeship standards that are bespoke to your employment sector.