Funding Reforms (England) 


This webpage provides an overview of funding for the new Trailblazer apprenticeships in England, and the introduction of the levy in the UK.

Currently, the SASE Apprenticeship Frameworks are running alongside the new Trailblazer apprenticeships. The funding method for SASE Frameworks (developed in 2011) remains unchanged. You can find out more on this funding here.

From now until April 2017, an interim funding model will be in place for providers and employers delivering the new Trailblazer apprenticeships.

 

What are the long-term funding plans? 

Long-term funding plans are still under consultation and may be subject to change.

UK Employers with a paybill in excess of £3million 

Introduction of levy - To raise additional funding, the Government will introduce an apprenticeship levy for employers with a paybill in excess of £3million from April 2017. 

Find out more about the Levy

Employers have control over where and when they spend their funding - From May 2017, providers will no longer have a contract with the SFA to receive direct allocations to fund apprenticeship programmes (Trailblazer apprenticeships and SASE Frameworks) for levy-paying employers. Employers, instead, will decide which provider they want to purchase apprenticeship delivery from and when payments are made, through the new Digital Apprenticeship Service (DAS).  The providers will then receive that money via their monthly ILR return.   

Micro-businesses and SMEs

SMEs funding to be transitioned by 2019/20* - For SMEs with a paybill under £3million, funding will continue to be channelled through provider allocations and employers will be expected to co-invest 10% of the total apprenticeship cost. The process will eventually be transitioned to a new funding system facilitated by the new Digital Apprenticeships Service (DAS).

On 12 August 2016, the government released proposals for funding from May 2017.

Key Points

  • Non-levy paying employers will co-invest with the government to pay for apprenticeships (SASE Frameworks and new Standards).   Employers will co-invest 10% and government will contribute 90%. The same model will apply to levy-payers who have exhausted their funds.
  • The new apprenticeship funding system will be made up of 15 bands, with the upper limit of those bands ranging from £1,500 to £27,000.  All existing and new apprenticeship frameworks and Standards will be allocated to the nearest funding band based on the current rate of funding.  This single funding band will be regardless of the ages of the learner, or geographic location.
  • The government will fund 100% of the cost of apprenticeship training for a 16-18 year old for businesses with fewer than 50 employees.
  • All employers will receive an incentive payment of £1000 for employing a 16-18 year old apprentice. The training provider will also receive an incentive payment of £1000 for delivering apprenticeship training for a 16-18 year old.
  • All organisations who wish to play a role in apprenticeship delivery must be listed on the Register of Apprenticeship Training Providers. This includes subcontractors.
  • Maths & English at Level 2 will continue to be funded at £471 per qualification, where needed in an apprenticeship.  Training providers will be funded for this directly by the government, rather than the funds coming from the employer levy.

 

Further detail is available in the documents below:

How does the apprenticeship levy work?

Key aspects of the levy include:

  • The levy will be 0.5% of an employer’s paybill which is in excess of £3million
  • It will be collected by HMRC, directly via PAYE process
  • There is a £15,000 allowance, similar to PAYE tax allowance
  • The Government will top-up monthly funds for apprenticeship training by 10%
  • No employer is exempt

 

Levy examples:

1. Employer with a pay bill of £2,000,000

  • Levy sum: 0.5% x £2,000,000 = £10,000
  • Subtract Allowance: £10,000 - £15,000 = £0 annual levy payment (as total levy sum amounts to less than the £15,000 allowance)

2. Employer with a pay bill of £50,000,000

  • Levy sum: 0.5% x £50,000,000 = £250,000
  • Allowance: £250,000 - £15,000 = £235,000
  • After 10% top-up = £235,000 + £23,555 = £258,000 levy funds available to spend

2. Employer with a pay bill of £2,000,000,000 

  • Levy sum: 0.5% x £2,000,000,000 = £10,000,000
  • Allowance: £10,000,000 - £15,000 = £9,985,000
  • After 10% top-up = £9,985,000 + £998,500 = £10,983,500 levy funds available to spend

Read the Government’s Apprenticeship levy guidance, August 2016.
 
Read our employers page for top tips on getting the most out of your levy by delivering high quality apprenticeships to boost your business’ productivity.

Bryony Kingsland - UK Funding Manager Watch our Funding Manager, Bryony Kingsland, outline the principles of the levy.

What is the Digital Apprenticeship Service (DAS)?

The Digital Apprenticeship Service (DAS) is an online portal that will enable employers to have a levy account showing the amount of funding they can spend on apprenticeships. From August 2017, the DAS will also enable levy-paying employers to make virtual payments to providers that are delivering their apprenticeships for the employer. 

The service will provide details of education providers in the area of the employer’s premises offering the desired apprenticeship. This will allow employers to approach local providers to negotiate funding and contributions.

 

What is the interim funding model?

There is currently an interim funding model in place for Trailblazer apprenticeships for 2016/17 delivery. Trailblazer apprenticeships are funded by employers and the Government on a one third/ two thirds ratio. For each £1 the employer contributes, the Government contributes £2 – up to a maximum funding cap. Funding for SASE Frameworks remains unchanged in this delivery year. 

Funds will be channelled through the lead provider, who will collect and confirm employer contributions. The lead provider will also receive any incentive payments and transfer them in full to the employer.

This funding model will remain in place for the 2016/17 delivery year.

We will update this webpage regularly, as information becomes available.

What are funding caps (2016/17 delivery year)

Each Trailblazer apprenticeship is allocated a funding cap – this is the maximum amount the Government considers is required to deliver that Trailblazer apprenticeship. However, within that maximum cap, employers can negotiate with providers over the cost of delivery. But the one third/ two third ratio will remain, whatever the price negotiated. There are six caps, which depend on the type of Trailblazer apprenticeship being taken, and they range from £3,000 for cap 1 up to £27,000 for cap 6.

The table below shows each cap with the maximum employer and Government contribution. 

Funding Band

Core Government contribution cap (£)

Employer contribution (£)

Maximum funding available (£)

6

18,000

 9,000

27,000 

5

13,000

 6,500

19,500

4

 8,000

 4,000

12,000

3

 6,000

 3,000

9,000

2

 3,000

 1,500

4,500

1

 2,000

 1,000

3,000

 

In addition to the apprenticeship funding, the Government will also fully-fund qualifications in Maths and English to Level 2.

Government incentives for employers (2016/17 delivery year)

Currently, the Government is also offering three additional incentives to employers for Trailblazer apprenticeship. These incentives can be claimed:

  • When an apprentice is aged 16 – 18 when they start
  • When the employer is an SME
  • When an apprentice completes their training, employers will receive a bonus payment

In some situations, these additional incentives will mean that 100% of training costs to the employer are covered.

The table below shows the three incentive payments that are available. 

Funding Band

Recruiting to a 16 - to 18 year old (£)

For a small business <50 (£)

For successful completion (£)

Maximum incentive paymens (£)

6

5,400

2,700

2,700

10,800

5

3,900

1,950

1,950

7,800

4

2,400

1,200

1,200

4,800

3

1,800

900

900

3,600

2

900

500

500

1,900

1

600

500

500

1,600

 

How to claim the funding and helpful links

Education providers delivering Trailblazer apprenticeships must ensure they collect and keep evidence, such as employer invoices and payments, for audit by the Skills Funding Agency (SFA).

New Trailblazer apprenticeship funding is claimed via the education provider Individual Learner Record (ILR) Data returns. There is guidance for providers in the ILR Manual, on this ILR page.

To assist employers with the funding requirement of the new Trailblazer apprenticeships, the SFA has produced a funding guide (in conjunction with employers) for employers: Trailblazer apprenticeship funding requirements for employers.

Further detailed funding information for employers on the new Trailblazer apprenticeships can be found on the Government’s Apprenticeship changes  page.

More detailed information about SFA funding rules in 2015-2016 and 2016-2017 for the new Trailblazer apprenticeships and audit requirements can be found on the SFA funding rules  page.

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