Apprenticeship Levy usage increases to 22% in year two

Two years ago, the Government introduced the apprenticeship levy to create long term sustainable funding for apprenticeships and to give employers more control to provide their staff with a range of training opportunities.
The levy has provided more funds than ever before for apprenticeship training and allows employers to choose which apprenticeships they offer, to whom and when.

The apprenticeship levy was part of wholesale apprenticeship reforms that has included the creation of new apprenticeship standards, written by employers for employers making them even more role-relevant and the relaxation of eligibility rules which has opened up this form of work-based training to university graduates for the first time.

This move was designed to allow employers to widen their apprenticeship provision to include not only school leavers but existing staff, offering more opportunities for up-skilling and development within organisations.
Since, it was introduced the levy has directly supported almost 313,000 people to start their apprenticeship journey.
In truth, the take up of apprenticeships by employers for the first 12 months since the introduction of the apprenticeship levy was slower than expected but recent figures released in, show a marked increase in funds now being drawn down by employers.

According to Skills Minister Anne Milton, in the 12 months to the end of January 2019, employers have now used 22% of their apprenticeship levy funds– a huge fourfold increase from the 5% drawn down in the first nine months of the levy.

She revealed that between May 2017 and the end of January 2019, levy-paying employers utilised £601 million of the funds available to them to pay for apprenticeship training in England.

By 2019-20 the funding available for investment in apprenticeships in England will have risen to over £2.5 billion, double what was spent in 2010-11 in cash terms.

Recent funding policy changes have been designed to increase levy spending even further and make apprenticeships more accessible for smaller businesses.

Levy-paying businesses that don’t spend their allocation are able to share more of their annual funds with smaller organisations, as the levy transfer facility rises from ten to 25%.

In addition, for businesses that find their levy pot does not cover all their apprenticeship training requirements the additional costs have been halved from ten to five per cent with the Government paying the remaining 95%.
This halving of co-investment costs is also shared with smaller businesses that don’t pay into the levy. From April their contribution to any apprenticeship costs has also been from ten to five percent.

Despite this progress, there are still many businesses that don’t understand how to get the most out of their apprenticeship levy pot.

Here are the key facts you should know:
Who pays the levy?
The levy is paid by employers with a pay bill of over £3 million who pay 0.5% of their total annual pay bill. Currently, only 2% of employers pay the apprenticeship levy.
How are funds accessed?
Levy funds are held in a Digital Apprenticeship Account (TAS) and can be allocated directly to approved training providers to cover the cost of your apprenticeship training
What can I spend my levy on?
Your levy can only be used towards the cost of approved apprenticeship training and end-point assessment. The funds are designed to cover training costs and cannot be used on wages, recruitment or other associated costs of hiring an apprentice. The levy can support skill development in new and existing employers
What happens to unspent funds?
From April 2019 levy funds paid into your account 24 months ago (from April 2017) will start to expire each month. If you don’t use them, you lose them and will not be able to access them again.

If you pay the apprenticeship levy, it’s important to know that from April 2019 the funds that entered your online account 24 months ago are now about to expire. If you haven’t got a plan for your apprenticeship levy in place, you may be missing out on a range of benefits. Talk to our levy advisors today and see what apprenticeships can do for your business.