Government Reforms (1): Apprenticeships

What do we already know?

We updated you on the Apprenticeship Levy in our February 2016 Newsletter Government reforms (3): Apprenticeships and on the Government’s guidance on this Levy in our April 2016 Newsflash ACAS & Government guidance on apprenticeships & the levy.

What’s new?

1. Apprenticeship Levy: Until now we have had little detail from the Government in respect of the Apprenticeship Levy.  However, on 12 August 2016 the Department for Education (which now has responsibility for the Government’s skills and apprenticeship policy) published new guidance on the revised apprenticeship system including:

• updated guidance on how the apprenticeship levy will work (available here); and
• proposals of how employers in England might access levy funding (available here).

The funding proposals contain an invitation to feedback on these changes before 5 September 2016. Following this, the plan is for the Government to publish an updated version of these funding proposals by October 2016 and then update employer guidance on calculating and paying the levy in December 2016.

The Government has confirmed that employers with an annual wage bill in excess of £3m will be required to pay in 0.5% of their annual wage bill into a digital account which the employer can access for the purpose of funding apprenticeships. These funds must be used within an 18 month period, or they will expire.  However, firms with a wage bill of less than £3m (which accounts for 98 per cent of all businesses, according to ONS statistics) will only pay 10 per cent of the cost of training an apprentice and the Government will cover the remaining 90%. Similarly, where a levy-paying employer wants to invest more in apprenticeship training than they have available in their digital account, the Government will fund 90% of the cost.

Unfortunately there will not be much time to evaluate and prepare for these changes as the Government has made clear it will be pressing ahead with the planned commencement date of 1 April 2017. Access to the funds generated by the levy and as otherwise set out in these proposals for apprentices in England will apply from May 2017.

2. Apprenticeship diversity champions toolkit published: The Government has published a toolkit, available here, which includes statistics, tips and case studies with a particular focus on increasing the proportion of apprentices from black, Asian and minority ethnic backgrounds.