In November last year we reported on the government’s plans to reform apprenticeships and introduce a levy of 0.5% for employers with a total payroll bill in excess of £3m. Those plans have now come into fruition with confirmation that the levy will be in force in April 2017, (silencing rumours that the implementation date would be delayed).
The government has also responded to some of the questions raised during consultation this summer:
- Existing apprenticeships will be funded under the current system until April 2017 when the new funding method will come into force.
- All existing apprenticeships frameworks will be phased out by 2020.
- Apprenticeship funding can be used to train existing staff to acquire substantive new skills.
- Employers who pay the levy will not get 20% of their payment until the apprenticeship is complete.
- Unspent funds in an employer’s account will expire after 18 months.
- To be eligible to receiving the funding, a training provider must be on the new Register of Apprenticeship Training Providers.
It remains to be seen whether the overhaul of apprenticeships will help the government reach its target of delivering 3 million apprenticeship starts by 2020. It certainly does not seem an unrealistic goal as more and more employers are looking to maximise their return on levy payments by changing their approach to training, recruitment and development of staff. With more employers in the “driving seat” by helping shape the new apprenticeship standards, we may see a reduction in graduate intake in favour of apprenticeships.
As the new funding system draws closer, businesses need to start preparing for how to get the most out of their contribution. Further information on the new system is expected to become available in October and December 2016 so watch out for further updates.