If you do not have a payroll in excel of £3 million you may believe that the Apprenticeship Levy will not affect you. However this levy is part of a wider reform of the apprenticeship system which will affect employers of all sizes who plan to take on apprentices after May 2017.
What is changing?
From May 2017 the way that the governments funds apprenticeships in England is changing. Apprentices who have been accepted on to a course before May will be funded for the full duration of their apprenticeship under the conditions that were in place at the time their apprenticeship started, but any new starts after May will be affected.
When the new system begins in May 2017, the government has an expectation that all employers will contribute towards the cost of apprenticeship training.
Employers who are not subject to the apprenticeship levy will need to contribute 10% of the cost of apprenticeship training with the government funding the remaining 90%, up to the maximum funding amount set for each apprenticeship.
This contribution will be waived for young apprentices (16 – 18 year old) with small employers (less than 50 employees) and there will also be an additional incentive for this age group of £1,000.
This will be paid in two equal instalments at three and twelve months, to support the additional employer costs associated with employing a young apprentice.
The government will also fully fund any additional learning support and English and maths training required to support apprenticeship achievement.
What is the maximum funding amount?
Moving forward there will be no fixed cost for training; employers will be able to negotiate training costs and content with providers up to set funding bands. The upper limit of each funding band will cap the maximum price that government will ‘co-invest’ towards apprenticeship training.
Each apprenticeship will be placed into a funding band which will range from £1,500 to £27,000 so these contributions will range from £150 to £2,700. The majority of intermediate apprenticeships will be in the £1,500 to £6,000 band, which would result in a maximum contribution of £600, which can be spread across the length of the apprenticeship framework if required.
What is the Digital Apprenticeship Service?
There are several elements to the Government’s new Digital Apprenticeship Service (DAS). For employers subject to the apprenticeship levy they will use the service to estimate levy contributions and manage their levy funds.
If you do not pay the levy, you won’t need to use the apprenticeship service to pay for apprenticeship training and assessment until at least 2018 and you will need to agree a payment schedule for your contribution with your training provider.
However all employers will be able to use the DAS to search for apprenticeship training and post apprenticeship vacancies and Moulton College can support employers wanting to use this service.