Funding for Apprenticeship Providers

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Funding for apprenticeships

Smaller employers and apprenticeship providers will be able to use the new digital apprenticeship service but an initial cap will be introduced at three starts each. The new system aims to boost funding for apprenticeships and make them more accessible. This would promote the use of apprenticeships and highlight their benefits.

Updated Education and Skills Funding Agency rules, published a policy today announcing the highly anticipated transition. This leads to the newer system giving a vast increase to the funding accessible for employers.

The new system has the potential to more than double the number of apprenticeship providers who will now be able to gain access to funding for non-levy payers.

What is the apprenticeship levy?

The Apprenticeship Levy is a UK tax on employers which can be used to fund apprenticeship training. In the previous tax year, it was paid by all employers with an annual pay bill of more than £3 million at a rate of 0.5% of their total pay bill.

Non – Levy payers can reserve funding for an apprenticeship, leading to recruitment.  Or through offering an apprenticeship course to an existing employee with a system called “reserve my funding”. This will be introduced to ensure they can plan ahead. The system also provides confidence that necessary funds will be available to pay for training. These funds will be available from the apprenticeship start as stated by the agency’s guidance.

The new scheme will boost the availability of funds for apprenticeship providers on a national scale therefore this will offer many more opportunities to those seeking an apprenticeship. The new method of funding would be more up to date and better in many different aspects.

In order for the Education Skills and Funding Agency (ESFA) to manage the introduction of a new policy, and to also ensure the programme remains within the financial budget. It will only permit employers to make a reservation for up to three apprentice starts initially.

Association of Employment and Learning Providers’ chief policy officer, Simon Ashworth who welcomed the move stated: “Given the current funding challenges within the levy system, this is a sensible approach,”.

“The good news is that providers without a contract will finally be able to access the market which means that more SMEs, should be able to start offering apprenticeships again.”

How will the scheme be financed?

Financial concerns arose as a result of predictions from the Institute for Apprenticeships and Technical Education. This hindered the introduction of the policy. It was predicted that the levy could potentially be overspent by up to £1.5 billion pounds in 2021/22 leading to an expressed concern about the stability of the new scheme. There were also concerns as to whether it would be possible to keep the scheme running over extended periods of time. However, these concerns were met with a bold statement from the DfE’s top civil servant who said that “hard choices” needed to be made to make the policy a success.

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