What is the Apprenticeship Levy?
In 2015, the UK government committed to three million apprenticeship starts by 2020. To achieve this target, the Apprenticeship Levy was introduced on UK employers with the aim of contributing up to £3 billion per year by 2021.
Since April 2017, employers with an annual pay-bill of £3 million or more are required to pay 0.5% into the Levy. It is estimated that around 21,000 UK employers are affected; no employer is exempt.
How can I use my Levy contributions to pay for training?
Each apprenticeship Framework or Standard is assigned a funding band. Employers can negotiate a price with a training provider on the actual cost of delivering training. Levy funds can then be used to pay for the delivery. If a fee is agreed which is greater than the band, the employer is required to pay the additional amount in full.
Once a training delivery fee has been agreed, the employer and provider will set up payment terms. The employer must transfer equal payments to the training provider each month, with 20% held back until completion. This final payment is triggered when the apprentice takes their End-point Assessment. Please note that the 20% is still paid to the provider even if the apprentice fails their End-point Assessment.
One of the core requirements of an apprenticeship is that apprentices must spend 20% of their working time in ‘off-the-job’ training. While this can include study time at college or a training provider, off-the-job training can also include activities which are undertaking at the apprentice’s place of employment – although certain rules and restrictions apply.
It is important to note that off-the-job training must take place during an apprentice’s normal, paid working hours. If it takes place outside of normal working hours then the apprentice must be given time off in lieu. It is also important to note that the 20% does not include English and Maths, where these are being studied as a mandatory component of an apprenticeship.
To untangle this, and to provide you with some specific examples of off-the-job training, ILM has produced the a guide for employers and training providers.
Who can I develop using the Apprenticeship Levy?
Government has relaxed restrictions around prior achievement. This means employers are able to deliver Management Apprenticeships to staff who are already qualified at a higher level, provided their prior qualification is in an unrelated discipline.
This is particularly useful where employers have highly-qualified technical staff who are ready to move into management positions. For example, an existing staff member who has a degree in Physics will be able to study towards a Level 3 or Level 5 Management apprenticeship, and their employer will be able pay for this out of their Levy funds.
This is particularly useful where employers have highly-qualified technical staff who are ready to move into management positions, or existing managers who require substantive new skills to make them more effective in their role.