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More questions than answers

July 14, 2016

After a turbulence of the last few weeks, both employers and providers are trying to make sense of the current situation for the funding of apprenticeships in levy and non-levy paying employers.

 

What we do know is that the apprenticeship levy for large employers with annual paybills of over £3 million is still to be introduced from April 2017, and that their digital apprenticeship service accounts are still planned to be up and running from January 2017. They will pay their levy contribution to HMRC through the PAYE process along with tax and NICs, and their accounts will be topped up with a 10% contribution from the government. But is this the best time to introduce an additional payroll tax of 0.5% when there is so much uncertainty about future economic growth? We also know that the government is still committed to achieving 3 million new apprenticeship starts by 2020, although there are some doubts about the predictions for new jobs created and tax revenue raised by that date. The drive to replace frameworks by the new standards is also continuing, although the original timescales have been extended and there still seems to be a lack of clarity about how independent end-point assessment will actually work in some sectors.

 

While the high level scope remains the same there are is a significant lack of operational detail, although that was originally promised to be available from June 2016. How will the new independent Institute for Apprenticeships oversee the design and delivery of apprenticeships, and also the introduction of the proposed new technical and professional qualifications? How will the new register of providers be operated and what are the implications for those who do not get accepted onto the register first time? But just as importantly, how will non-levy paying employers be affected and how will their new apprentices be funded after April 2017?

 

Current apprentices on existing frameworks will continue to be funded through the current system applied to frameworks where employers are expected to make a contribution of 50% of the rate except for 16-18 year olds, with some reductions in the rates for larger employers and apprentices over the age of 24.  For the new Trailblazer standards, the pilot formula assigns one of six capped rates to the standard on the assumption that for every £1 contributed by the employer, there will be a co-investment by the government of £2. In addition there are incentive payments to the employer for employing 16-18 year old apprentices, for small employers with less than 50 staff, and for successful completions.

 

For all employers of all sizes, it was intended to make changes to funding from April 2017, and that these would be announced by the end of June. The information would have included provisional funding bands for each apprenticeship, levels of government support for non-levy paying employers and 16-18 payments from April 2017, as well as provisional English and maths payments from April 2017. The eligibility rules for who employers can spend apprenticeship funding on and where they could access more info on who can provide apprenticeship training were also promised.

 

So what will be the co-investment rate for non-levy paying employers from next April? Could it be as low as 10% with 90% coming from the government as some have predicted? This would certainly help to encourage more small and medium sized employers to recruit and train more apprentices.

Hopefully this information will be available in the next few days.

 

But there are still more questions than answers….

 

 

 

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