Government unveils proposals for Apprenticeship Levy and incentives

The Government has announced detailed proposals for how the new funding arrangements for apprenticeships will work under a reformed system, including additional financial support for firms that are small enough to be exempt from the Apprenticeship Levy.

Under the plans, employers that are too small to pay the levy – around 98% of employers in England – will have 90% of the costs of training paid for by the Government.

Extra support – worth £2,000 per trainee – will also be available for employers and training providers that take on 16 to 18-year-old apprentices or young care leavers. Employers with fewer than 50 employees will also have 100% of training costs paid for by the Government if they take on these apprentices.

Apprenticeships and Skills Minister, Robert Halfon, said: ‘The Apprenticeship Levy will help create millions of opportunities for individuals and employers. This will give our young people the chance they deserve in life and to build a highly-skilled future workforce that the UK needs.’

The proposals also include plans to:

• allow employers to use levy funds to retrain workers in new skills, even if they have prior qualifications
• allow levy-paying employers – those with a pay bill of over £3 million that want to spend more on training than is in their digital account – to also benefit from Government support, with 90% of their additional apprenticeship training costs being funded
• enable employers to determine exactly what training their apprentices receive and what provider they receive it from
• introduce a new register of training providers from April 2017 to improve the link between training providers and employers.

The proposals come very soon after the Federation of Small Businesses (FSB) released a report showing that small businesses could ‘double’ the number of apprentices they take on, given the right funding and incentives.

Mike Cherry, National Chairman of the FSB, said: ‘This announcement sends a clear signal that Ministers are listening to our members’ concerns.

‘Getting apprenticeship reform right, including changes to existing funding arrangements, is key to apprenticeship growth among small businesses and the Government achieving its target of three million new apprenticeships over the course of this Parliament.’

However, others have called for the introduction of the levy to be delayed. Carolyn Fairbairn, Director-General of the Confederation of British Industry (CBI), stated: ‘Though business understands the fiscal challenges, it would be a great mistake to rush ahead before a viable scheme is ready.’

The Government is inviting feedback on the proposals until 5 September. The Scottish Government is also running a consultation on the best use of the Apprenticeship Levy in Scotland, which closes on 26 August.