Written ministerial statement by Education Secretary Justine Greening on reforms to the apprenticeship funding system from May 2017.
Apprenticeships transform lives and are vital in making this a country that works for everyone. As well as giving young people the chance to build a better future by taking their first step on the employment ladder, they give those already in work the opportunity to progress further. And for those just about managing, they can unlock a brighter future. That is why we are committed to 3 million new apprenticeships by 2020, spending £2.5bn to transform this country’s investment in skills, in our people.
For employers, apprenticeships bring great benefits too, by boosting the skills of the workforce and helping to increase economic productivity. Yet for too long far too many employers have under-invested in the skills of their employees compared to in other countries. It is time to change that and ensure all employers play their part in improving productivity and social mobility. So we are working in partnership with employers to implement major reforms.
The new apprenticeship levy, which we are introducing in April 2017, will put the funding of apprenticeships on a sustainable long-term footing so we can support opportunities for all. The levy will be set at 0.5% of pay bill and only employers with a pay bill of more than £3 million will have to pay the levy. Employers that are not eligible to pay the levy will continue to receive government support towards the costs of apprenticeship training and assessment.
The levy applies to all UK employers but apprenticeship funding policy is devolved. It is for the devolved administrations to decide how they use their levy income. This statement sets out how we will fund apprenticeships in England to help build an economy that works for everyone.
To do that, we are not only introducing the levy but also reforming the way we fund apprenticeships, introducing a dedicated register of approved apprenticeship training providers and launching the employer-led Institute for Apprenticeships. These changes will ensure apprenticeships are high quality, meet the needs of employer,s and provide opportunities for millions more people.
After extensive discussions with employers and training providers we are today publishing the final funding policy for May 2017 onwards and details of the new register of apprenticeship training providers. The adjustments we have made to the funding policy since our proposals in August will help ensure that the reforms benefit more employers, providers and apprentices.
Today we are confirming the final funding policy.
Key features are:
- higher funding for STEM apprenticeship frameworks and higher pricing of apprenticeship standards to support improved quality, and greater flexibility to train those with prior qualifications
- longer period of time for employers to spend funds in their digital account, now with 24 months before they expire, an increase from our 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
- 90% contribution from government to the cost of training for employers that will not pay the levy
- 100% contribution from government to the cost of training for small employers that will not pay the levy and who take on apprentices who are 16 to 18 years old, 19- to 24-year-old care leavers or 19- to 24-year-olds with an education and health care plan
- £1,000 each from government to employers and training providers when they take on 16- to 18-year-olds, 19- to 24-year-olds who were in care or who have an education and health care plan
- help for training providers to adapt to the new, simpler funding model through an additional cash payment equal to 20% of the funding band maximum where they train 16- to 18-year-olds on frameworks
- a simplified version of the current system of support for people from disadvantaged areas to ensure the opportunity to undertake an apprenticeship is open to everyone, no matter where in England they live, their background or family circumstances
We will continue to work in close partnership with employers and providers in the implementation of these reforms. We know they are major changes and we want to work together to ensure we transform our country’s skills for the benefit of all.