On 1st May 2017 the way the government funds apprenticeships in England is changing. While only employers with an annual payroll of over £3 million will be required to contribute to the new apprenticeship levy, there will be significant changes to the funding for apprenticeship training for employers of all sizes.

All apprenticeships started before 1st May 2017 will be funded through to completion using existing funding rules. After this date larger companies will begin to pay the levy and will access funding for their apprentices through a Digital Apprenticeship Service account. Employers that do not pay the levy will not need to use the digital apprenticeship service to pay for apprenticeships until at least 2018.

How will funding for smaller companies work from May 2017?

  • From 1st May non-levy paying employers will agree a price with a training provider for the training and assessment of their apprentices.
  • The government has put a maximum funding cap on each type of apprenticeship. If the price the employer agrees is higher than the maximum funding they will have to pay the difference and there will be no government support on this extra amount.
  • Employers will be asked to pay a contribution directly to the provider, spread over the lifetime of the apprenticeship, and the government will pay the rest. This is called ‘co-investment’.
  • Co-investment means that the employer pays 10% and the government pays 90%. For the first year at least this 10% would be paid directly to the training provider by the employer.
  • Employers who take on an apprentice aged between 16 and 18 or an apprentice between 19 and 24 who has an Education and Health and Care plan or has been in the care of the local authority will receive an extra £1000 payment from the government paid over two instalments at 3 months and 12 months.
  • If employers recruit an apprentice with additional learning needs the government will pay the training provider an extra payment of up to £150 per month to support them. Additional funding may be available if there is evidence of greater support needs.
  • The existing AGE grant scheme, which supports small employers in recruiting apprentices, will run until the end of the July 2017. Following this the government has agreed that employers with fewer
    than 50 employers will be able to take on an apprentice aged 16-18 (or aged 19-24 who has been in care or has a Local Authority Education, Health and Care plan) at no cost, with the government paying 100% of the training costs rather than it being paid through co-investment.
  • All English and Maths training to support apprentices reach the minimum standard required will be paid for by the government.