Government funding for apprenticeships is either by co-investment for smaller employers, or via the apprentice levy for larger employers. The apprentice levy is designed to encourage businesses to invest in apprentices. Its aims are to:
For apprenticeship funding purposes, employers fall into one of two groups:
£££ Levy-payers (large employers with an annual wage bill over £3m)
£ Non-levy-payers (smaller employers with an annual wage bill less than £3m)
The apprenticeship funding guidance given here applies to apprenticeships in England only. Wales, Scotland and Northern Ireland have their own arrangements for funding apprenticeships.
The apprentice levy was introduced to secure a long-term funding solution for high quality apprenticeships that better meet employer needs. Although ALL employers will benefit from the levy, in terms of extra funding available for training – only the largest employers will have to contribute towards it.
Example: Employer with an annual pay bill of £5,000,000
Levy paying employers access apprenticeship funding via the Apprenticeship Service (AS)
The apprenticeship service is a computerised service, whereby levy-paying employers use an online account to access their levy fund for training apprentices. Money from the levy can only be used to pay for apprenticeship training with an approved apprenticeship training provider. The AS also holds lists of approved apprenticeship training providers. After choosing an approved provider and negotiating a price for training employers can make payments to them directly from their account.
Special Circumstances Where a levy paying employer doesn’t have enough in their digital account to pay for their apprentices training, they will receive co-investment at the same level as non-levy payers.
Employers need to complete an Employer Agreement with the Education and Skills Funding Agency (ESFA) to pay training providers to carry out apprenticeship training.
Employers with wage bills of less than £3 million per annum receive government funding for apprenticeships via co-investment. Employers only pay 5% towards the cost of training and end-point assessment, with government funding the remaining 95%, up to the funding band maximum.
Extra Support for Small Employers
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