Apprenticeship reforms and key information for employers
Apprenticeships benefit employers and individuals, and by boosting the skills of the workforce they help to improve economic productivity. The apprenticeship reforms will support an increase in the quality and quantity of apprenticeships so that more individuals have the chance to pursue a successful career – whether this is their first step on the employment ladder or progression within a current employer or sector.
The reforms give employers more control over designing, choosing and paying for apprenticeship training. The government will double the annual level of apprenticeship spending between 2010-11 and 2019-20 to £2.5bn, which will be funded by the new apprenticeship levy. The levy will be paid by employers with a pay bill of over £3m from April 2017, less than 2% of employers in the UK.
How will this affect my business?
Non Levy-paying employers
In addition to the functions available to all employers, from May 2017 levy-paying employers will be able to access funding for apprenticeships through their digital apprenticeship service account and:
- Pay for apprenticeship training and assessment
- Manage their funding and apprentices, view their levy balance and plan their spending
- Stop or pause payments (for example, if their apprentice stops their training, takes a break from training).
To access their funding, levy-paying employers will need to set up an account on the digital apprenticeship service from January using their Government Gateway ID and PAYE scheme details, which company payroll teams should have.
By 2020, all employers will be able to use the digital apprenticeship service to pay for training and assessment for apprenticeships. Until then, non-levy paying employers will be able to continue to negotiate and agree their apprenticeship programme with their chosen training provider.
90% of non-levy paying employers’ apprenticeship training and assessment costs in England will be paid for by the government. The government will require these employers to make a 10% contribution to the cost, paid directly to the provider, and the government covers the rest. This cost will be spread over the lifetime of the apprenticeship.
The government is offering additional support to organisations with fewer than 50 employees by paying 100% of training and assessment costs for their apprentices aged 16-18 and for those aged 19-24 formerly in care or with a local authority education, health and care plan.
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How much will I pay?
The key question currently is “Will I be affected and if so, how much will I be liable to pay?”
To help gauge this, the Skills Funding Agency have designed a calculator to estimate what contributions, if any, your company will have to pay.