The Government has a vision to create 3 million Apprenticeships by 2020 to help address the nation’s skills shortages and stimulate economic growth.

As a result Apprenticeships in England are changing. The Specification of Apprenticeship Standards for England (SASE) will be replaced with the new ‘Trailblazer’ Apprenticeships from 7 May 2017.

For years employers have complained that Apprenticeship Frameworks do not service industry needs, so employers are designing new Apprenticeship Standards so that they meet the needs of their industry, learners and providers.

As part of the transition from Frameworks to Standards, the withdrawal of Frameworks for new starts commenced on 31 May 2016. This will be a staged process and will continue until all Frameworks are closed in 2020.

Through the GTA England group, NLT Training Services has had significant involvement in the development of Engineering Apprenticeship standards and is presently working alongside SME employers to develop the right qualifications to support their industry. This approach has given NLT a greater understanding of SME needs, which is contributing to making the transition from frameworks to standards a smoother process.

In 2012, the Review of Apprenticeships in England was commissioned by the Secretary of State for Education and the Department for Business, Innovation & Skills (BIS). The review aimed at identifying whether Apprenticeships delivered the training, qualifications and skills that employers and learners needed.

The resulting report highlighted that a significant number of employers felt current SASE Apprenticeship Frameworks were not fit for industry needs.

The new ‘Trailblazer’ Apprenticeships aim to:

  • Give employers control in designing Apprenticeships
  • Increase the flexibility of delivery
  • Simplify the funding system
  • Increase the effectiveness of training

The introduction of independent End-Point Assessment (EPA) is one of the biggest changes in the Government’s Apprenticeship Reforms.

EPA is a new way of assuring quality in the Apprenticeship system. It replaces the existing model of continuous assessment resulting in qualifications.

Once an Apprentice has completed their Apprenticeship, they will be ‘signed off’ by their employer and ready for EPA of their knowledge and practical capabilities. In most cases, the assessment will be graded and must show the Apprentice is fully competent and productive in the occupation.

The registered assessment organisation and the assessor must be independent of, and separate from, the training provided by the provider and employer.

In spring 2017 the way the government funds Apprenticeships in England is changing.

From 6 April 2017, a 0.5% Levy will apply to all UK employers with a wages bill in excess of £3 million. It is based on the total earnings subject to Class 1 Secondary National Insurance contributions and will be collected along with PAYE each month.

Companies who pay the Levy can claim their Levy back as a voucher which they can then use to pay for apprenticeship training and smaller companies can claim £15,000 per annum funding allowance to spend on Apprenticeships training.

The additional 0.5% of the gross payroll of each eligible employer, means businesses will have to pay a minimum of an additional £15,000 to HMRC annually. According to HMRC, however, less than 2% of employers will pay the Apprenticeship Levy.

The UK Government’s decision to introduce the Apprenticeship Levy from April 2017 was the biggest tax raising measure in the 2015 Autumn Statement and some £12 billion. is expected to be raised by 2020.

Any UK employer, in any sector, with a pay bill of more than £3 million per year is liable to pay the Levy.

The Levy also applies to connected companies, i.e. where a company is connected with another company . If the same person has control of both companies, then the total wage bill for all connected companies is considered and not just the individual companies’ pay bill.

  • The Levy will be paid through PAYE returns to HMRC
  • The Levy will be 0.5% of the pay bill, paid through PAYE
  • An allowance of £15,000 to offset against Levy liability (The Levy allowance is not a cash payment and cannot be used to purchase Apprenticeship training)
  • The Government will pay an additional 10% on top of your monthly Levy
  • The funding cap for frameworks/standards is the maximum you can spend on that apprentice.
  • The Levy is to pay for Apprenticeship training only.
  • Employers receive a £1,000 incentive for taking on an apprentice aged 16-18
  • If the employer’s Levy pot runs out they will be funded the same as a non-Levy payer.
  • Apprentices who have been accepted on to an apprenticeship before May 2017 will be funded for the full duration of the Apprenticeship under the present conditions
  • Levy funds will expire 24 months after they enter your account unless you spend them on Apprenticeship training. This will also apply to any top-ups in your account

Example:

  • Employer has £12,000 annually entering their Levy account
  • Monthly account funding = £1,000
  • Top up: 10% x £1,000 = £100
  • Levy monthly account increase: £1,000 + £100 = £1,100
  • £13,200 annually to spend on Apprenticeships

For more information about paying the Apprenticeship Levy, visit https://www.gov.uk/government/publications/apprenticeship-levy/apprenticeship-levy

As a non Levy payer you will have an annual pay bill of under £3 million.

Although you won’t be paying into the new Apprenticeship Levy or using the new digital Apprenticeship service to pay for apprenticeship training and assessment until at least 2018, the way apprenticeships are funded will also change for you.

Every individual Apprenticeship Framework and Standard will be allocated to a funding band. The upper limit of the funding band will cap the maximum price that government will ‘co-invest’ towards.

The government will fund 90% of the agreed price for training and assessment, and you as the employer will pay 10%. The new system has 15 funding bands. Each type of apprenticeship will be placed in a specific band, the caps for which range between £1,500 and £27,000 depending on the apprenticeship type.

From May 2017, SMEs will be expected to make a financial contribution to apprentice training. However, Apprentices who have been accepted on to an apprenticeship before May 2017 will be funded for the full duration of the apprenticeship under the present conditions.

However, recognising that smaller employers (less than 50 employees) have historically played a very important role in helping young and disadvantaged people into the workforce for the first time, the government will continue to pay a grant to small employers to support them in taking on new apprentices aged between 16-24 years of age. This is called the Apprenticeship Grant for Employers 16-24 (AGE). The AGE grant scheme will continue until the end of the 2016/17 academic year.

From May 2017, non-Levy payers:

  • All apprenticeships who are 19+ and above, there is an expected employer contribution of 10% of the framework/standard.
  • 16-18 learners in companies with less than 50 employers are completely free until the end of the 2016/17 academic year.
  • Employers pay no national insurance contributions for Apprentices up to the age of 24
  • Employers receive a £1,000 incentive for taking on an apprentice aged 16-18

Example:

Employer chooses an Apprenticeship Standard in Cap 9

Apprentices Standard Cap = Cap 9 £9000

Apprentice Duration  = 18 months

Employer contribution 10% paid to provider  = £900

Government contribution paid by SFA = £8100

Government contribution paid in 18 equal months   = £450 per month

For more information about funding for Apprentices in your organisation, speak to a member of NLT Training Services' Business Development team today.