One of the biggest changes to training policy coming into force this April is an overhaul of how apprenticeship funding works.

In this guide, we’ll explore the new funding system for apprenticeships, examine how the banding structure will work in practice and highlight some key items of interest for employers.

How apprenticeship funding is changing

Apprenticeship Levy funding limitsCurrently, the government will either partially or fully-fund the cost of training an apprentice, depending on how old they are. Employers can apply for funding to cover the cost of the qualification (or up to £15,000), provided they’re in charge of their apprentice’s formal study, in addition to employing them.

However, from April 2017, this will change drastically, with apprenticeship standards and frameworks being fitted into 15 funding bands, each with an upper limit (which ranges from £1,500 to £27,000) that dictates the amount of Levy funding or government co-investment that can be used to pay for apprenticeship-based training.

All existing frameworks, in addition to the new Trailblazer standards that have been approved for delivery, have been placed into a funding band and each new standard will be categorised as they become ready for use.

You can view a full list of standards and how far they’ve progressed here.

How apprenticeship levy funding bands work

Funding bands don’t have a lower limit, which gives employers and training providers leeway to negotiate varying costs depending on their needs and circumstances.

Setting an upper limit means employers won’t be able to spend all their available funding on a single apprentice, enabling them to increase the number of apprentices they can take on while ensuring high quality training and value for money.

However, if they so wish, employers are free to invest more than the upper limit, although they won’t be able to use their Levy funds or apply for co-investment in this case.

Levy-paying employers will simply have the amount they’ve agreed to pay for training deducted from their Apprenticeship Service Account (ASA), while non-levy payers (or those who’ve used up all the funds in their ASA account) will need to contribute 10% of the cost.

If you’ve got existing apprentices, or are taking on apprentices before these changes come into force, existing funding rules will apply for the full duration of their apprenticeship.

There’s also a range of additional funding support available for young apprentices, those from disadvantaged backgrounds and apprentices who require learning support. However, this is paid directly to the employer or provider, rather than via the ASA.

Apprenticeship Levy funding bands table

It’s also important to note that training is funded on a pay-as-you-go basis. This means - for example - if you’ve got an apprentice enrolled on a standard that takes two years to complete in Band 7 and you’re paying the upper limit of £5,000, this will be spread across both years at £2,500 per annum.

While employers are understandably keen to make sure they’re getting their money’s worth, if the Levy isn’t incorporated into a concerted workforce development plan, there’s a danger of quickly running out of staff to utilise these funds on.

You can find a complete list of frameworks and standards that have been approved for delivery and where they sit in funding bands here.

Why is apprenticeship funding changing?

Apprenticeship funding changesFollowing the Richards and Sainsbury Review, several major issues were identified with the existing apprenticeship system, which was thought to be acting as a barrier to employers engaging with the initiative.

The government is looking to apprenticeships to help address a growing productivity and skills gap in the UK and has set the ambitious target of generating three million apprenticeship starts by 2020.

This new funding scheme forms part of a raft of changes to apprenticeships that aim to encourage employers to engage with training.

These measures include doing away with eligibility requirements, which providers greater scope to use apprenticeship training on existing staff members and involving employers more closely in the development of standards to suit jobs in their industry.

Your thoughts?

Hopefully we’ve managed to shed some light on Apprenticeship Levy funding bands, but if you’ve got any questions on the topics we’ve touched on above - be sure to get in touch via Twitter or Linkedin.

And if you’re looking for bespoke advice how best to engage with the Levy and procure training - be sure to get in touch with our team of Levy experts today. 

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