17 August 2016

Build UK Calls for Apprenticeship Levy Delay

The Government’s Apprenticeship Levy which is due to take effect from April 2017, will have a significant impact on the funding of training and apprenticeships across the construction sector.

The Department for Education (DfE) has now published further details on how the new levy will operate and the funding that will be available for apprenticeships in England. While this additional information is welcome, questions remain unanswered and there is still not enough clarity for employers.

Build UK has therefore issued a statement supporting the CBI’s call for the introduction of the Apprenticeship Levy to be delayed. This will give employers more time to prepare and enable Government to work with business to ensure the new system works effectively from the outset.

The DfE is holding a short consultation on the funding proposals and Build UK will be responding by the 5 September deadline. The key points our response will make are:

• Government has still not provided clear enough information for employers

• The proposed system of funding caps must reflect the higher costs of delivering construction apprenticeships. The initial allocation of construction programmes to the new bands is concerning, as in many cases costs have been underestimated. The result would be employers having to pay any additional costs

• While the Apprenticeship Levy covers the whole of the UK, the DfE proposals only cover how apprenticeship funding will operate in England. Employers need clarity on how the new funding arrangements will come together on a UK-wide basis.

Build UK will be submitting a high-level response by email to apprenticeships.levy@bis.gsi.gov.uk. Members may wish to do the same or complete the DfE’s online survey which asks more specific questions on the new funding arrangements.

Summary of DfE Apprenticeship Funding Proposals

Start date – The funding system will take effect from 1 May 2017 for all apprenticeships that begin after that date. Any apprenticeship begun before 1 May 2017 will be funded through to completion under the current rules. 

What funding covers – The system will support employers to pay providers for the training and assessment of apprentices.

Funding bands – All apprenticeships (current frameworks and new trailblazer standards) will be allocated to one of 15 funding bands. The upper limit of these bands range from £1,500 to £27,000 and represent the maximum the system will provide for each apprenticeship.

Paying for your apprenticeships

• Employers who pay the Apprenticeship Levy will receive funding to a digital account on a monthly basis depending on the amount of levy they pay. The money in their digital accounts will be used to pay their chosen providers.

e.g. If an apprenticeship has an upper funding limit of £5,000, the employer will be able to transfer up to £5,000 to a provider from their digital account for that apprenticeship.

• For employers who do not pay the Apprenticeship Levy there will be a system of co-funding, with Government contributing 90% of the apprenticeship costs.

e.g. If an apprenticeship has an upper funding limit of £5,000, the Government will contribute £4,500.

Negotiating with providers – Employers will be responsible for negotiating a price with providers. Any employer that agrees a price which is above the funding limit for their chosen apprenticeship must bear all the additional costs.

e.g. If an apprenticeship has an upper funding limit of £5,000, and the employer agrees a price of £9,000 they must pay the additional £4,000 in full.

Employing 16-18 year olds: The Government will contribute an additional £2,000 towards the costs of training apprentices aged 16-18.