The Government has pledged to create three million apprenticeships by 2020 with a special focus on higher and degree level apprenticeships offering education right up to Masters degree level.
From April 2017, large employers will pay a levy of 0.5% of their payroll bill to create a £3 billion funding pot to pay for these apprenticeships.
They will then be able to draw down the value of their contribution – plus a 10% top-up donation from the Government - in vouchers which can be used to pay for apprenticeships.
Use them or lose them! Levy vouchers expire if they are not spent within 18 months. A firm paying a £100k levy would recoup the full value with just four degree apprenticeships.
Vouchers can be spent on training, assessment and certification. Employers themselves pay the apprentice’s wages.
Small employers will not be able to access levy funds initially. Up until April 2017 for an Apprenticeship Standard they will pay a third of the cost of apprenticeships with the other two-thirds (up to £18,000 per trainee) paid by the Government. For Apprenticeship Frameworks, the government will fully fund 16-18 year old starting an apprenticeship and pay 50% for over 19s. Funding rates have not yet been set beyond April 2017.
Employers who have spent all of their levy but who want to offer more apprenticeships will receive Government support at the same generous rate as small employers.
Additional incentive payments are paid to employers who recruit young apprentices, to small businesses who get involved and for the successful completion of apprenticeships.