Since 6th April 2017, employers with a wage bill of more than £3m will have to pay a 0.5 per cent levy to fund apprenticeships. This will affect employers in all sectors.
The aim is to raise 3bn a year to meet a target of three million new apprenticeships by 2020. With a clear focus on developing the UK's skills and improving long-term productivity, the Government is committed to increasing the quantity and quality of Apprenticeships whilst also putting control of funding firmly in the hands of employers.
Funding policy updates from 1 April 2019
Employers who do not pay the levy or who want to invest more in apprenticeship training than is available in their digital account, need to make a financial contribution, a ‘co-investment’, towards the cost of training and assessment of apprentices, with government funding the remainder.
From 1 April 2019, this government funding will cover 95% of the maximum funding band rate for all new apprenticeship starts. Employers will pay the remaining 5% co-investment payment direct to the training provider.
Where the negotiated price for the apprenticeship exceeds the funding band, the employer is responsible for paying the amount above the funding band maximum, direct to the training provider.
The benefits of the Levy
- Funding will be directly controlled by employers via the DAS
- Revenue from the levy will help fund all post-16 apprenticeships in the UK
- Apprenticeships will no longer be able to be viewed as a talent solution to a single business area at a fixed level, but will need to be viewed as a genuine route to the development of wider skills and future talent right across the organisation, across a range of levels of competence.
GKA Levy Optimisation
Your business may not have to use all the consultancy services in our portfolio, or any of them although many of our clients do. Whether you are looking for strategic advice or our full package of services from design to certification, you only need to use what is most relevant for your business and where your resource gaps lie.
What you need to remain mindful of is that with the introduction of the Levy, the way Apprenticeships are run and managed will change. The responsibilities of both employer and provider will need to adapt to ensure all of your objectives are achieved - whether it's purely maximising the Levy spend and ensuring all monies are return through Apprenticeships or if it's simply strengthening your programme and looking ahead at the years to come and future-proofing your L&D strategy and apprenticeship programmes to remain in control of the process and continue to deliver a great return through these programmes.
Setting up and implementing an apprenticeship scheme for the first time to recover your apprenticeship levy is complex, time consuming and requires expert knowledge which is why businesses like Virgin Media, Unilever, Glaxo SmithKline and Argos have all partnered with GKA to maximise the Levy opportunity.