Apprenticeship Reforms A guide for Employers

The landscape for employers is changing……… from April 2017 both the funding and the delivery of apprenticeships will change….. Some of these changes have already started

From May 2017 apprenticeships will be funded differently

  • Via a digital skills account if you are a levy paying employer
  • Via the Skills Funding Agency (with a 10% employer contribution) if you are not a levy paying employer
The levy will apply to both public and private UK employers across all sectors with a payroll bill in excess of £3m a year. Your pay bill will be based on the total amount of earnings subject to Class 1 secondary NICs. Earnings include any remuneration coming from employment, such as wages, bonuses, commissions, and pension contributions that you pay NICs on but not benefits in kind.
  • You will receive a £15,000 allowance against your levy bill. Where a group of employers are connected you will only be able to use one
  • Your levy payment will be paid into a digital account and must be used within 24 months (starting oldest first)
  • The government will top up your account every month by 10%
  • Your contribution collected by HMRC monthly will be 0.5% of your pay bill and you must spend your levy to pay for apprenticeship training and end point assessment only (not wages)
If your wage bill is less than £3m p.a. you won't pay the levy but you will need to contribute 10% of the funded cost of an apprenticeship (exclusions apply). This will be paid to the provider you choose to deliver the apprenticeship programme
  • If you have less then 50 employees and take on a 16-18 year old apprentice they will be fully funded (no employer contribution)
  • You will also receive £1,000 towards the cost of employing that young apprentice
Each Apprenticeship will be placed into one of 15 bands, ranging from £1,500 to £27,000. The 10% is calculated on these values
e.g. an Apprenticeship banded at £5000 means the employer will contribute £500

These bands are the maximum amount that can be spent on each Apprenticeship and the fees are negotiated with each employer

Frameworks are changing to Standards by 2020. A Standard is a fit for purpose set of skills and qualifications required to carry out a job role. These have been designed by employers and approved by employers. They contain an end point assessment – carried out by an independent organisation of the employers choosing
Minister of State comes to view our technical and professional education
  1. Are simpler to understand
  2. Designed by industry
  3. Cover a broader range of occupations
  4. Higher level apprenticeships may lead to professional body status
  5. Available at levels 2-7 (from introduction to degree level)
Types of Apprenticeships

Intermediate Apprenticeships

  • Qualified and skilled at level 2

Advanced Apprenticeships

  • Qualified and skilled at level 3, usually a more experienced member of the team

Higher Apprenticeships

  • Qualified and skilled at levels 4 and 5 including management roles (this is operating at degree level)

Degree Apprenticeships

  • Undergraduate level (levels 5 and 6) and will include a full degree on completion. Can lead to masters degree (level 7)
Higher and degree apprenticeships are not just a learning programme - they're designed in collaboration with employers and are a great way for employers to increase productivity and performance by attracting and developing talent to fill the higher level skills gaps.

Benefits of employing an apprentice

The average Apprenticeship improves productivity by £214 a week

Apprenticeships are a tried and tested way to recruit new staff or re-train and upskill existing staff

Apprenticeships can help you tackle skill shortages

Learning can be done in your workplace, minimising disruption and maximising impact

Apprenticeships are a great way of attracting enthusiastic talent with fresh ideas

They can be tailored to specific job roles, making them flexible to the needs of your business

Apprenticeships provide you with the skilled workers you need for the future.

Apprenticeships can help reduce staff turnover by increasing employee satisfaction and loyalty

Any questions?


Can employers use the levy to fund existing employees?


So long as the training meets an approved Apprenticeship

The standard or framework and the training provided allows them to acquire substantive new skills and the content of the training is materially different from any prior training or a previous apprenticeship.

This same rule applies for employers wanting to put employees on an equivalent or lower level qualification than they have already achieved.

Can the levy be used to cover apprentices who signed up pre-May 2017?


  • The latest guidance states that for those apprentices who started pre-May 2017, funding for the full duration of their Apprenticeship will be under the terms and conditions that were in place at the time the Apprenticeship started.
  • Funds in your digital accounts cannot be used to cover these apprentices whether they were signed up under existing frameworks or new Trailblazer standards.


For most businesses this is last chance to recruit a new Apprentice or offer an Apprenticeship opportunity to an existing member of staff without making a 10% contribution to the cost of training*

*(excludes organisations with less than 50 employees recruiting

16-18 year old staff post May 2017)

How will payments be made to the provider?

When you agree to buy Apprenticeship training from a provider, monthly payments will be automatically taken from your digital account and sent to the provider. This spreads the cost over the lifetime of the Apprenticeship.

You don’t need to have enough funds in your digital account to cover the entire cost of the training at the start. As payments are taken from the digital account monthly, you just need to have enough funds in your account to cover the monthly cost of each Apprenticeship you have chosen. The government will make sure your payments reach the provider

How will I make payments if I'm not a levy payer?
Your payments (90%) will be made directly to the provider by the Skills Funding Agency. You will be required to pay the 10% directly to the provider
What do I do next?
We're here to help you establish your levy budget and plan your training delivery. Contact the Illuminate Training Solution Team using the link to our website at the end of this glide-show or e: t: 0330 024 1234

...and listen to one of our Apprentices to help you make up your mind

Robert's employer is also delighted

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