The government has revealed plans to ease restrictions on how Apprenticeship Levy funds are distributed. From July, large firms who pay the Levy will be able to transfer up to 10% of their funds annually to multiple supply chain partners. Previously, a levy-payer was only able to share funds with one other employer, but Apprenticeships and Skills Minister Anne Milton has relaxed that rule in the face of concerted pressure from industry.
Tony Howard, director of Training at the Building Engineering Services Association (BESA): “It is something we have been fighting for since the Levy started last year and was originally supposed to start in April. Sharing the funding in this way will allow many more SMEs to invest in apprentices.”
Only around 2% of employers actually pay into the Levy – those with annual payrolls of £3m and above – but the estimated annual pot of £3bn is intended to be used by all employers to subsidise apprentice recruitment and training. However, there has been considerable confusion about how non-levy paying firms could gain access to the money.
The government intended the Levy to play a key role in its plans to deliver three million new apprenticeships by 2020, but figures released by the Department for Education earlier this year revealed a 28% drop in new apprentice starts since its launch.
“The fall in (apprentice start) numbers was no surprise because there was total confusion about where the levy money was going,” said Mr Howard. “The principal behind the Levy is sound, but small employers were struggling to access funds for specialist training provision. Also, many large companies were not using the full amount they paid in.
“This decision is another step towards giving employers real flexibility because they will have the power of the fund to choose the provision they want. This should result in a steady rise in apprentice numbers over the next few years,” he added.
By making a transfer to pay for an apprentice’s training and assessment, larger firms can support companies who may not have considered hiring an apprentice before or could not get the specialist provision they wanted.