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Apprenticeship Levy Funds Training for All Ages of Workforce for First Time

4th April 2017

Engineering and manufacturing companies of any size could fill skills gaps by using the government’s new apprenticeship levy, which comes into force on 6 April. For the first time, employees aged 24 and over will attract 90% funding for apprenticeship training, with no upper age limit and with eligibility for graduates.

“Employers have struggled to train in the last few years and this new funding could help upskill our workforces and compete with Europe in terms of productivity,” says Ann Watson, chief executive of Semta (Science, Engineering and Manufacturing Technologies Alliance). “Funded apprenticeships are now available for every age group in the workforce. Employers don’t have to recruit to get the skills they need, they can upskill existing employees. This is a tremendous opportunity for both employers and employees.”

Under the levy, employers with a wage bill of more than £3m will pay 0.5% to fund apprenticeships. This is to meet the government’s objective to raise £3bn a year to create 3m more ‘high-quality’ apprenticeships by 2020.

Watson adds, “The government has identified poor productivity as a key drag on UK economic growth and prosperity. This means that boosting our technical skills is critical. Engineering is one of the most productive sectors in the UK economy, producing 9% of turnover and 11% of gross value added (GVA) from just 6% of the workforce. But training would boost this further.”

Eligible employers will receive a £15,000 allowance – available through the Apprenticeship Service (previously known as the Digital Apprenticeship Service) – to offset the costs of the levy. Additional funding is available for selected groups, such as apprentices in deprived areas, people previously in care or on a health plan.

Funding for older apprentices (19+) is more beneficial under the new rules for all size companies and for both levy and non-levy payers. Companies with fewer than 50 employees will be able to access 100% funding for apprentices of aged 16-18 or under 25 with a care plan. All companies will pay just 10% on those aged 19+.

Apprenticeship standards can now be completed at a lower level if materially different. This was never previously allowed. So if an employee has a level 3 qualification they can do a level 2 to increase skills in a different area. Moreover, multiple same levels can be completed if the discipline is materially different (for example, welding, CNC turning or mechatronics), making topping up skills considerably easier.

For large employers paying the levy, they can now make apprenticeship training available to many more employees and offset the costs against their levy fee.

Manufacturing has accounted for 20% of growth since the recession ended and by partnering with specialist training providers, science, manufacturing and engineering businesses can tailor-make apprenticeship programmes to suit their specific needs and those of their workforce. However, the UK’s productivity still lags behind that of European countries so it’s essential for companies to be able to bring their existing workforces up to speed.

Semta is a not-for-profit organisation responsible for future engineering skills of the UK’s most advanced sectors. Led by employers, it has an apprenticeship service which designs and delivers bespoke apprenticeship training for large and small employers in their workplaces as well as assessment centres across the UK, through EAL. They were a key partner in helping the government to agree the new apprenticeship standards on behalf of employers.

Semta has free advice for employers on how to apply for and use the new levy at semta.org.uk/apprenticeship-levy or call 0845 643 9001.