The Apprenticeship Levy came into effect on 6 April 2017 and is part of the government’s commitment to creating 3 million apprenticeships in England by 2020.
The levy requires all employers operating in the UK with an annual pay bill of more than £3 million to spend 0.5% of the total to help fund apprenticeships. It is estimated that 2% of UK manufacturers will be required to pay the Levy.
Levy paying employers now have to create an account with the Apprenticeship Service to receive levy funds to spend on apprenticeships and to pay training providers.
Non-Levy paying employers can now share the cost of training and apprentice assessment with Government, who will fund 90% of the costs.
An additional change is that there are no longer any restrictions on the age of apprentices and fewer restrictions on the previous qualifications an apprentice can possess. The funds can be used to train new recruits, or can be used to upskill the existing workforce.
The Impact of the Levy So Far
Despite the government’s aim to create three million new apprenticeships by 2020, the impact of the levy so far has been disappointing. Recent research by the Education Apprenticeship Service has shown that:
Almost half of eligible employers haven’t signed up for an account with the Apprenticeship Service. Just 10,500 accounts were set up by the end of August – barely half of the 19,150 predicted by the Department for Education.
There have been 34,700 “commitments” to take on an apprentice using the new service since May. Of these, 8,000 are still pending approval. Numbers peaked in July at 8,300, but have dropped off since then.
Almost half of the commitments (16,300) relate to apprentices aged 25 and over. Just 7,300 are for apprentices under the age of 19, while 10,700 were in the 19-24 age bracket.
More of the apprenticeship are at lower levels. Some 16,400 were at intermediate levels, with 13,800 at advanced levels and 4,200 at higher levels. The levels of the remaining 200 apprenticeships are unknown.