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Government confirms apprenticeship funding boost
Published:  30 October, 2016

The government has confirmed new reforms to its apprenticeship funding system, including £60 million to be spent helping young people from deprived backgrounds, as part of its drive to create 3 million new apprenticeships by 2020.

Employers with fewer than 50 employees will receive 100% of the cost of training apprentices aged between 16 and 18. This will also apply if they take on 19 to 24-year-olds who were in care, or 19 to 24-year-olds with an education and health care plan.

The government also confirmed that just 2% of employers will pay into the Apprenticeship Levy – those with payrolls above £3 million – and that the remaining 98% will receive 90% of any apprenticeship training costs from May 2017. The Levy itself will be 0.5% of a company's pay bill. The levy will apply to all UK employers, however, the apprenticeship funding policy will be devolved, with administrations able to decide how they use the levy income.

"This is the news we have been waiting for," said Tony Howard, director of training at the Building Engineering Services Association (BESA). "Employers need certainty about future funding provision so they can plan their recruitment strategies and this provides welcome reassurance."

Mr Howard also welcomed the fact that particular focus had been placed on Science, Technology, Engineering and Maths (STEM) apprenticeship frameworks. The funding available for these subjects has been increased to reflect their greater complexity and the need to improve quality.

The government has also simplified the funding model and built in greater flexibility so employers will now have two years to access the funds in their digital training accounts. Employers will also be able to transfer training funds to companies in their supply chains. The new scheme has been designed to provide greater flexibility to train those with prior qualifications in a bid to help existing workers develop new skills.

According to Skills Minister Robert Halfon, the £60 million invested in training apprentices from the poorest areas in the country means up to one third of new apprentices will come from this background.

Graeme Dryden, technical services manager at APHC, said: "It's encouraging to see further evidence of government's commitment to creating apprenticeships, and these latest policies certainly appear new and fresh, with good opportunities for smaller employers to engage with apprenticeship training.

"However, with regards to the levy we should be mindful of larger employers in our industry, whose tight margins and financial pressures can make it difficult to recruit and train young people as it is. The government has set a challenging target of creating 3 million apprenticeships by 2020. Will it be met? Only time will tell."

Pictured: Tony Howard, director of training at the Building Engineering Services Association