The government’s proposed Apprenticeship reforms mean real changes to the way that Apprenticeships will be funded in the future. To understand the changes it is best to start with the current position.
The cost of Apprenticeship training is fully funded by the government for those aged between 16 and 19 years, and part funded for those over 19 years of age, requiring a training contribution from the employer. The government transfers the money directly to the Training Provider whether a Further Education College or a private Training Provider at agreed intervals in arrears. 25% of the funding is withheld until the Apprenticeship is completed. The employer is responsible for paying the Apprentice’s wages and for providing onsite training to develop the Apprentice to be able to do the job competently.
The government wishes to ensure the control of Apprenticeship training sits with employers. The proposed Apprenticeship funding reforms regulations mean that for every £1 an employer contributes the government will put in £2 and the money will be held in a digital account so the employer can pay the training provider of their choice. There will be incentives which will ensure that for SMEs taking on an apprentice aged between 16 – 19 years, this could be cost neutral.
Employers with an annual pay bill of over £3m will be subject to an apprenticeship levy of 0.5% with an allowance of £15,000 to offset against their levy payment. This money will sit in a digital account so that the employer can access money to pay for their Apprenticeship programme.
The good news is that employers who pay the levy and are committed to Apprenticeship training will be able to get out more than they pay in. Employers will be able to choose where to direct the funds in their digital account. Where employers choose not to use their levy, the government will make the money available more widely.
What this means for employers from April 2017 is that they will be in the driving seat and be able to use Apprenticeship programmes as part of their skills strategy to ensure they can compete in their marketplace.
It may be difficult for both SMEs and large employers to get a handle on the changes. How can they ensure that they are ahead of the game, making maximum use of the existing system until the changeover comes into effect and being prepared for the change?
Help is at hand.
The Apprentice Training Agency (ATA) is just such a solution. As experts, they understand the funding rules and with their experience of sourcing the best training solution for employers, they can ease the transition for employers. As employers you will be looking for value for money as well as the training that your business needs, so whatever your size this is the time to start talking about Apprenticeships and prepare for making wise decisions about the skills training your business needs.