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The Apprenticeship Levy: Further details released

In the February edition of HR Focus we explained how the apprenticeship levy will work and the likely impact of the new mandatory charge on your…

In the February edition of HR Focus we explained how the apprenticeship levy will work and the likely impact of the new mandatory charge on your organisation.

This month saw the publication of further Government guidance which both reiterates what we already knew and provides a few additional important details.

Top–ups

We already knew that the Government planned to ‘top-up’ contributions from employers ‘committed to apprenticeship training’. The new guidance clarifies how this will work. The Government will apply a 10% ‘top-up’ to monthly funds entering a levy paying employer’s digital account, for apprenticeship training in England, from April 2017. Every £1 contributed will be increased to £1.10 in value. It appears that the ‘top-up’ will apply to all paying employers, as long as contributions are made monthly. The guidance does not set out any additional criteria for employers to demonstrate ‘commitment’.

Funding cap

Withdrawal of money paid in will be subject to a funding-cap. Employers will not be able to spend an unlimited amount of money on a single apprentice. Funding per-apprentice will vary according to the type and level of apprenticeship. More expensive, higher quality training is likely to have a higher cap.

Where the cost of training the employer wishes to buy is greater than the funding cap for a particular standard or framework, the employer will have to contribute additional funds.

Spending levy funds

The guidance reiterates that levy funds can be spent on apprenticeship training only (as opposed to wages or expenses). However, it confirms that this will include all aspects of training including things such as English and Maths and assessment/certification.

The Government acknowledges in the guidance that many employers would like to re-direct their funding to other employers (e.g. suppliers). The Government are considering how this might be achieved.

It was proposed at consultation stage that levy funding would ‘expire’ after two years. However the guidance suggests that this may be changed to allow employers flexibility to pay for their apprenticeship training when it best suits their business need. Further details are promised by June 2016.

Funds can be spent on in-house training

Employers can use levy funds to ‘buy in’ training from an approved provider or can deliver the training themselves. However, to deliver training, the employer would need to register as an approved provider and be subject to Skills Funding Agency (SFA) quality arrangements and Ofsted inspection.

Industries with existing levies

The position for industries which already operate sector-specific training levies is under review. The Government is working with the relevant Industry Training Boards for the construction and engineering construction industries. The Boards will consult their members ahead of the introduction of the apprenticeship levy on how their existing arrangements will be affected and whether any further changes are required.

View the government guidance.

Further information on the apprenticeship levy will be published throughout the year with an employer guide explaining the operating model for the levy promised next month. We will keep you updated.

Contact Stuart Jones, Partner, (stuart.jones@weightmans.com)