Press release

New apprenticeship funding to transform investment in skills

How apprenticeships will be funded as part of the drive to help millions get the skills they need for a successful career.

The government has today (25 October 2016) set out how apprenticeships will be funded as part of the drive to help millions get the skills they need for a successful career and make Britain a country that works for everyone.

Apprenticeships give people more control over their lives and can be the difference between just about managing and pursuing a skilled, long-term career. The government wants to give everyone this opportunity, regardless of their background or where they live, which is why we are giving more support for 16- to 18-year-olds and those from disadvantaged areas.

The funding policy will underpin the new apprenticeship levy, which will deliver much needed investment in the skills we need to change the lives of millions.

The government will continue to work with employers and providers as it introduces the reforms, to help ensure we transform our country’s skills for the benefit of all.

Main measures confirmed today:

  • more support for younger apprentices and disadvantaged people:
    • 100% of training costs will be paid by government for employers with fewer than 50 employees who take on apprentices aged 16 to 18 years old. This will also apply to smaller employers who take on 19- to 24-year-olds who were in care or 19- to 24-year-olds with an education and health care plan
    • £1,000 each from government to employers and training providers who take on 16- to 18-year-olds and 19- to 24-year-olds who were in care or who have an education and health care plan
    • providers that train 16- to 18-year-olds on apprenticeship frameworks will be given an additional cash payment equal to 20% of the funding band maximum in order to help them to adapt to the new, simpler funding model
    • providers that train apprentices from the most deprived areas on apprenticeship frameworks will continue to receive additional funding from government. More than £60 million will be invested in supporting the training of apprentices from the poorest areas in the country, equalling around one third of all apprentices. It is vital that we make sure that these funds are being invested in the right way, which is why we will conduct a fuller review into how to support individuals from all backgrounds into apprenticeships in future. This will look at the support employers should receive, as well as providers, and conclude next year.
  • more flexibility for employers:
    • longer for employers to spend funds in their digital account, now with 24 months before they expire, an increase from government’s original proposal of just 18 months
    • a commitment to introducing the ability for employers to transfer digital funds to other employers in their supply chains, sector or to apprenticeship training agencies in 2018, with a new employer group including the Confederation of British Industry, Federation of Small Businesses, British Chambers of Commerce, Charity Finance Group and EEF - the manufacturers’ organisation - to help government develop this system so that it works for employers
    • more funding for STEM apprenticeship frameworks and higher pricing of apprenticeship standards to support improved quality, and providing greater flexibility to train those with prior qualifications. This will support the industrial strategy and provide wider opportunities for more individuals to develop new skills

Skills Minister Robert Halfon said:

Apprenticeships work. The reforms we are rolling out will guarantee support from employers and government, so that millions of people can get the apprenticeships, skills and jobs for the future.

Our apprenticeship levy will boost our economic productivity, increase our skills base and give millions a leg up on the ladder of opportunity - over 90% of apprentices currently go into work or further training. Making Britain a world leader on apprenticeships is essential if we truly want a country that works for everyone.

To ensure higher-quality apprenticeships, the government has also introduced a new register of apprenticeship training providers, which opens today. All providers on the register will have to pass quality and financial tests. Those with an ‘inadequate’ Ofsted rating for apprenticeship provision will not be eligible to apply to the register.

The new apprenticeship funding policy was outlined in August. It will underpin the levy which will be paid by employers will a pay bill of more than £3 million and will put the funding of apprenticeships on a sustainable long-term footing so we can support opportunities for all.

The measures announced today are the first steps in upskilling the nation by giving millions a leg up on the ladder of opportunity to high-quality jobs, and giving employers the skills they desperately need.

Notes to editors

  1. The proposal to pay 90% of apprenticeship training costs will apply to more than 98% of employers in England that won’t pay the levy when it is introduced in 2017.
  2. By 2019 to 2020 government spending on apprenticeships in England will be double the level of spending in 2010 to 2011.
  3. In March 2016 the government published a guide for employers on how they will pay the levy, access the digital system and pay for apprenticeships in future. This has been updated with the latest information for employers.
  4. To help employers see how the levy and funding system will work for them, the government has created an online calculator. The simple-to-use tool will enable employers to understand how much levy they will pay and how they could use their digital funds to pay for training in future.
  5. The apprenticeship funding system will be made up of 15 bands, each with an upper limit ranging from £1,500 to £27,000. The upper limit of each funding band will cap the maximum amount of digital funds an employer who pays the levy can use towards an individual apprenticeship or that the government will co-invest. All existing and new apprenticeship frameworks and standards will be placed within one of these funding bands and it will be up to employers to negotiate prices with providers.
  6. The register of apprenticeship training providers will open for applications today. Providers who want to deliver less than £100,000 of apprenticeship training per year as a subcontractor can choose to apply for the register but it will not be compulsory. We have also launched a procurement for apprenticeship delivery for smaller employers who will not pay the levy.

Colleges, employers and other organisations have been lending their support to the apprenticeship levy.

TUC General Secretary Frances O’Grady:

High-quality apprenticeships are vital to our economic growth, and to young workers looking for a decent start to their career. The levy will give a welcome boost to funding for apprenticeships, and will make sure that all employers who benefit from a skilled workforce are paying their way. Trade unions look forward to working with employers to make a success of the levy and the apprenticeships that it funds.

Cambridge Regional College Principal Mark Robertson said:

The levy is a game-changing approach to the training and development of people across the country’s largest organisations. At Cambridge Regional College, we are experiencing genuine excitement from employers, in all kinds of businesses, that the levy will enable them to grow their own key employees of the future, to develop people and to address skills shortages to build capacity, productivity and prosperity, for today and for the years ahead.

West Suffolk College Principal Dr Nikos Savvas:

At West Suffolk College we see the introduction of the levy as an extremely positive move. The levy will help companies to invest wisely in staff training and support their economic growth. This college has a long and proud tradition and an excellent track record of working with a wide variety of companies and apprenticeships. We are looking forward to working in collaboration with all employers to support them with their staffing needs.

Blackpool and The Fylde College:

We believe employee development is a fundamental component in increasing workforce productivity. It benefits both the employers in terms of increased productivity and individuals in terms of career prospects and social mobility. Apprenticeships, including higher and degree apprenticeships, form an integral part of the reforms. We look forward to seeing the full details of the apprenticeship reforms and the positive impact which they may have on the local community and our employer partners.

Balfour Beatty, Leo Quinn, Group CEO Balfour Beatty and Founder of The 5% Club:

As employers we have a responsibility to train the next generation with the skills that our businesses will need to drive the British economy forward in the decades ahead. The government’s support for apprenticeships and the introduction of the levy will mean many more young people receive the training which will mean they can have long and satisfying careers.

Interserve Learning and Employment, Managing Director Chris Peel:

We see apprenticeship reform and the levy as a positive force for change. As a large business and a levy payer, we are confident that we will make the best possible use of the opportunities opened up by the changes to meet our own current and longer-term skills needs. From the perspective of Interserve Learning and Employment (ILE) it will allow us to build on the guidance and support we are already providing to a number of employers about what the levy means and what they need to do to get ready for and benefit from it.

Chartered Management Institute, Director of strategy Petra Wilton:

A recent CMI survey of over 1,000 managers showed strong support for the apprenticeship levy, and 80% of managers agree there needs to be far greater investment in higher level skills to meet the massive economic and employment challenges that we’ll face post-Brexit. Bad management currently costs British businesses £84 billion a year in lost productivity, leaving us lagging behind our G7 competitors. We clearly need to use the opportunities of the levy to ensure that we have the future skills such as management and digital that employers are crying out for.

On an individual level, the likes of Chartered Manager Degree Apprenticeship will give both school leavers and existing workers alike the chance to get a degree, professional accreditation and work experience to kick-start their careers in management.

Airbus UK, Mark Stewart, General Manager and HR Director:

It’s excellent to see that the government has listened to employers and has looked to reflect their thinking in these latest proposals.

It gives me great hope that employers irrespective of size will see the benefits of offering good quality apprenticeships ‎as we do in Airbus.

EEF - the manufacturers’ organisation, Terry Scuoler, CEO:

Apprenticeships are critical for our industry, but manufacturers have long been wary of the levy and wanted it to be delayed until they could be satisfied it was fit-for-purpose. Today’s announcement clearly reflects our sector’s concerns and is a significant step forward.

Allowing employers a longer period of time to spend their digital funds and recognising the cost of investing in higher quality STEM apprenticeships are 2 important features in creating a levy that will reward employers investing in high-quality training for the long-term. There are many positives to take away from today’s announcement and the government has shown willing to work closely with industry on some of the remaining outstanding issues.

Timing is now all important. With a shrinking window of opportunity to prepare for the levy, government must pull a final implementation plan out of the bag quickly. At the same time, it must be mindful that employers as well as government need time to prepare for the sea change in apprenticeship funding next year.

The Association of Colleges, David Hughes, Chief Executive:

It is clear that the government has listened to colleges, training providers and employers. We will all need to work in partnership to ensure that the levy is a success and that the reforms to apprenticeships deliver for students, employers and for inclusive economic growth. The levy and the reforms are big shifts in the apprenticeship programme which will need sensitive and watchful handling. The Association of Colleges will continue to work closely with the government to help with those changes and support colleges to seize the opportunities that the funding reforms and new register will create.

New College Durham, John Widdowson, Principal:

Apprenticeships lie at the heart of our college strategy to give businesses and other organisations the skilled and capable people they need to succeed. They give our learners of all ages the skills, competencies and knowledge employers demand whilst at the same time laying the foundations for exciting careers and productive lives. The apprenticeship levy is an opportunity to establish new partnerships between the college, local employers and our apprentices. We will build on what has already been achieved to make us all even more successful in the future, contributing to economic growth and productivity.

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