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Apprenticeship Levy update – apprenticeship costs and incentives unveiled

The Government has now published the highly anticipated proposals underpinning the new apprenticeship reforms, including the cost of apprenticeship training, along with the additional support for businesses that are not in scope to pay for the Apprenticeship Levy.

The new apprenticeship funding system will be made up of 15 funding bands ranging from £1500 to £27,000 depending on the nature of the apprenticeship. For example, apprenticeships that sit within administration and customer service areas attract a lower training fee with STEM (Science Technology, Engineering and Mathematics) subjects and degree level apprenticeships commanding a higher training cost. It is up to the employer to negotiate the cost of training directly with the training provider.

Under the new proposals, the 98% of employers with wage bills of less than £3m will have 90% of the costs of apprenticeship training paid for by the government.

Also, the Government has introduced financial incentives of £2,000 per apprentice to support employers and training providers that take on 16 to 18-year-old apprentices or young care leavers. Furthermore, businesses with fewer than 50 employees who take on these apprentices will not have to contribute towards the cost of training their apprentice (but will have to pay the salary), rather this will be 100% funded by Government.

The proposal also introduces the following:

  • Employers will be able to use levy funds to retrain new and existing staff, even if they have prior qualifications e.g. Undergraduate or Postgraduate degrees
  • Levy paying employers that want to spend more on apprenticeship training than what is in their digital account will be able to access the 90% Government contribution
  • Guidelines for applying to become a Registered Training Provider, allowing employers the opportunity to deliver the training themselves

DiVA Director, Arit Eminue said: “There is still a way to go in terms of ironing out how the system will work in practice, however, the funding ratio for non-levy paying employers is not prohibitive, particularly when there is much more flexibility on the eligibility criteria of the apprentice, allowing companies the ability to find and train the right talent for their business irrespective of age or educational achievement.”

For details on how you can get your business ready for the apprenticeship levy, contact Arit Eminue on 0203 189 1784 for a free consultation.

Useful Links

Click here for updated guidance for employers

Click here to estimate your levy costs