Guide to apprenticeship funding
Welcome to GLP Training’s comprehensive guide to apprenticeship funding! Whether you're new to the apprenticeship scene or simply need a refresher, we aim to clarify the intricacies of funding so you can make the most informed decisions for your business.
How are the cost of apprenticeships decided?
Apprenticeship Funding Bands
Funding bands are essentially the caps set on the amount of money the government will contribute towards an apprenticeship. Each apprenticeship standard or framework falls under one of these bands, and it dictates the maximum amount of funds that can be spent on training.
How often are they revised?
The government reviews and may revise the funding bands periodically to ensure they align with market rates and the costs of providing quality training. It’s crucial for employers to keep updated with the latest bands, so they’re aware of potential costs and funding available.
Embedded & additional qualifications:
Enhancing the Apprenticeship Journey
An integral part of some apprenticeship standards is the inclusion of embedded qualifications. These are qualifications that are integral to the apprenticeship and are mandated to ensure apprentices gain a holistic learning experience.
These are specific qualifications that an apprentice must achieve to successfully complete their apprenticeship standard. They are interwoven into the apprenticeship program and are essential for the apprentice to progress and eventually move on to the end-point assessment, also known as the gateway.
Importantly, the cost of these embedded qualifications is encompassed within the apprenticeship's funding band. This means employers do not have to bear any extra cost for these qualifications; they are already factored into the government's contribution and any co-investments.
Beyond the embedded qualifications, employers might find it beneficial to include extra qualifications to enhance the learning experience or to tailor the apprenticeship to specific business needs. These are termed as additional qualifications.
The decision to include additional qualifications in an apprenticeship is typically made in agreement with the training provider. Depending on the arrangement, the cost of the additional qualification might be incorporated into the existing funding band.
Alternatively, it could be an additional cost borne by the employer outside of the typical apprenticeship funding.
You can discover more about tailoring apprenticeships for your organisation in our specific ‘Tailoring your Apprenticeships’ guide.
The Apprenticeship Levy Reform (2017)
In 2017, the UK government introduced a landmark change known as the Apprenticeship Levy Reform. Designed to bolster the country's apprenticeship programs, this initiative shifted a significant part of the funding responsibility to large employers.
How does the Levy work?
Companies with an annual wage bill exceeding £3 million pay 0.5% of their total wage bill into the Apprenticeship Levy. This amount is deposited into a digital account and can be claimed back to fund new apprenticeships within the firm. These funds expire after 24 months if not utilised.
Levy Gifting: An Overview
One of the transformative aspects of the Apprenticeship Levy is the ability of levy-paying businesses to support the broader ecosystem through "levy gifting." This provision offers an opportunity for companies to use their unspent levy funds to aid other employers, particularly those in their supply chain or within their industry.
Co-investment and Employer Contributions
For businesses that don’t pay into the Apprenticeship Levy (typically those with a wage bill less than £3 million), there's an alternative funding method called co-investment.
How does co-investment work?
The government will cover 95% of the apprenticeship training and assessment costs up to the funding band limit. The remaining 5% is contributed by the employer. This is the co-investment. This means smaller businesses can still take advantage of apprenticeships without the brunt of the costs.
Incentive payments have been introduced as a way to encourage employers to hire new apprentices. They can be particularly beneficial if you're looking to expand your workforce or bring in fresh talent.
What should you know about incentive payments?
They are available to hire new apprentices that fit certain criteria, such as being between 16-18 years old or under 25 with an Education, Health, and Care plan. The amount can vary based on government policies and the specific criteria of the apprentice.
Payments are either made directly to you as the employer via your Digital Apprenticeship Service (DAS) account, or they are first transferred to your provider to then be passed on to you as the employer. They can be spent on anything to support the company's costs.
The Government, Department for Education and ESFA can at times run different incentive payment schemes that can be time-sensitive. These often occur during specific economic events such as during the Covid lockdowns. It is great to keep an eye out for these updates and if you’re not sure then we’d be more than happy to help and alert you to changes.
Key Points to Consider
Digital Funds: For employers paying into the levy, your funds are stored in a digital account. You have control over these funds and can allocate them to apprenticeship training.
Expiry: Don't forget that Levy funds expire 24 months from the date they enter your digital account. It's a use-it-or-lose-it situation, so make sure you're actively engaging in apprenticeship programmes.
Extra Support: Some apprentices might require additional support due to various reasons, such as having learning difficulties. There are provisions for extra funding in these cases.
Training Providers: Partnering with a good training provider is essential. They can guide you through the process, ensure the quality of training, and help you maximise your funding and ROI.
Apprenticeship funding, with its various facets, can appear complicated at first. However, understanding the Levy, co-investment, and funding bands can position your business to take full advantage of the financial support available. Whether you're a levy-paying employer or a smaller business, there's support available to help you grow, innovate, and nurture the next generation of talent.
For more tailored advice or to discuss how GLP Training can assist you in navigating apprenticeship funding, please reach out to our team. We're committed to helping you make the most of these opportunities for the betterment of your company and the wider community.