Government Update on changes to Apprenticeship Funding

8. The following update has been provided on changes to Apprenticship Fuding, please read through carefully and get in touch if you need anything explained in further detail.

9. Claims can start to be made by employers in relation to these apprentices from 1 September 2020. Those claims must be made through the apprenticeship service. There will be two levels of payment based on age. For apprentices aged 16-24 the payment will be £2,000, and for apprentices aged 25 or over the payment will be £1,500. The payment will be made directly to employers in two equal instalments,

where the apprentice is still in learning at day 90 and day 365.

11. There will be no limit on the number of incentive payments that an employer can claim for apprentices eligible to receive funding, provided each apprentice meets the criteria, including being a new employee.

13. For the remainder of the FY2020-21, the number of ‘active’ or ‘used’ reservations available to non-levy paying employers at any given time will increase from 3 to 10. This enables non-levy paying employers to recruit more apprentices for their businesses through the apprenticeship service. This policy will come into effect from 15 July and will continue to be kept under review as we further assess how the new system is working.

Levy Transfer

26. Employers can spend their funds on their own apprentice training and assessment costs, or they can transfer them to another employer. If funds are not used, they expire. We expire funds because otherwise levy-paying employers would accrue very large balances, with the potential to create financial commitments that Government has not planned to meet. Organisations can transfer unused funds in their account to any number of

employers, for any number of apprenticeships with each, up to the maximum of 25% of funds entering the account. For example, employers could transfer funds to employers in their supply chains or work with regional, local or sector partners.

32. Transferred funds will be used to pay for the training and assessment cost of the apprenticeships agreed with the receiving employer. The sending employer and the receiving employer need to first agree the details of the transfer of funds, for example, which apprenticeship standard, how many apprentices and the cost. The transfer amount should cover 100% of the eligible training and assessment costs, up to the funding band maximum, of the apprenticeship standard. Using transferred funds to support starts does not count towards the number of reservations available to non-levy payers.
33. By agreeing to fund an apprenticeship with a transfer, the sending employer is committing to fund the apprenticeship over its entire duration until completion.

Small employer Waiver

38. Employers with fewer than 50 people working for them are able to train, at no cost, those aged 16-18 or those aged 19-24 who have previously been

in care or who have a Local Authority Education, Health and Care plan. These employers are not required to contribute the 5% co-investment; instead, the government will pay 100% of the training costs for these individuals up to the funding band maximum.

Reservation of funds

40. From January 2020 employers who do not pay the apprenticeship levy have been able to create accounts on the apprenticeship service and reserve funding. Moving away from the use of Government-procured contracts for apprenticeship training will give smaller employers greater control over their apprenticeship choices
42. For the remainder of the FY2020-21, the number of ‘active’ or ‘used’ reservations available to non-levy payers at any given time will increase from 3 to 10. This enables non-levy paying employers to recruit more apprentices for their businesses through the apprenticeship service. This policy will come into effect from 15 July and will continue to be kept under review as we further assess how the new system is working.

Extension of the timeframe for non-levy employers to move to the apprenticeship service

44. The transition period to move all employers who do not pay the apprenticeship levy onto the apprenticeship service, has been extended from October 2020. Funds available to providers through non-levy procured contract allocations can be used for new starts until 31 March 2021. We plan to fund all starts through the apprenticeship service from 1 April 2021.

Support for young apprentices aged 16-18

55. When employers take on a 16-18-year-old on an apprenticeship standard, they receive £1,000 to help meet the extra costs associated with this. This will be paid to employers in two equal instalments at 90 days and 365 days.

56. These payments are made to employers via their training provider, who will pass the money on. These payments are separate from, and therefore in addition to, the incentive payments for hiring a new apprentice, which are paid directly to the employer through the apprenticeship service.

Incentive Payments for Employers hiring a New Apprentice

62. An incentive payment for will be made to employers who hire an apprentice between 1 August 2020 and 31 January 2021.

63. The apprentice must be a new employee to the business, have a contract of employment start date between 1 August 2020 and 31 January 2021 (inclusive) and must not have been employed by the employer within the six months prior to the contract start date. Claims can start to be made by employers in relation to these apprentices from 1 September 2020. Those claims must be made through the apprenticeship service There will be two levels of payment based on age. For apprentices aged 16-24 the payment will be £2,000, and for apprentices aged 25 or over the payment will be

£1,500. The payment will be made directly to employers in two equal instalments, where the apprentice is still in learning at day 90 and day 365. There will be no limit on the number of incentive payments that an employer can claim for apprentices eligible to receive funding, provided each apprentice meets the criteria, including being a new employee.