The Apprenticeship Levy was introduced just over a year ago on 6 April 2017 with the aim of creating 3 million new apprenticeships by 2020. Employers have been slow to use the funding, which has been set aside for apprenticeship training and with over £1 billion still in the pot, it remains to be seen whether it will be utilised before it starts to expire next year.
Overview of The Apprenticeship Levy
Employers will be familiar with the premise of The Apprenticeship Levy system, which came into effect last year. Simply put, employers with an annual wage bill of more than £3 million are required to pay 0.5% of that wage bill into the system through PAYE. Those employers then have access to an apprenticeship service account from which they can draw down funds of up to £15,000 a year to pay for apprenticeship training, so long as it satisfies the requirements. In the event that funds in the employer’s account are not used within 2 years, they will then be absorbed back into the system and will no longer be available for use by that individual employer.
Recent Figures
Despite the additional funds being available, recent figures show that out of the circa £1.39 billion available from The Apprenticeship Levy system, only £108 million of has been taken out by employers. Rather than the anticipated increase in the number of apprentices, there were actually 4,900 less apprenticeships started in December 2017 than in December 2016 and, out of the 16,700 that were started, only 6,200 of these were supported by The Apprenticeship Levy funding.
The lack of uptake in accessing the funds may be due to some employers believing that The Apprenticeship Levy system is time consuming and complicated. The apprenticeships need to fall within one of the apprenticeship standards or frameworks, which creates a lack of flexibility in some sectors. There is also a 20% off-the-job learning requirement for apprentices which can be unattractive to some as it takes staff away from their duties for a significant amount of time during the week.
How Nelsons Can Help
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