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Apprenticeship Levy Consultation: Employer owned apprenticeship trainingBack

ApprenticeStartsPurpose of consultation:

  • To discuss with employers how the levy system might work
  • What would and would not work for employers
  • NFDA responded

Summary of responses, most respondents thought:

  1. Funding should be used to train apprentices in small companies
  1. Employers should have up to 2 years to use funding
  2. Divisions as to whether or not there should be a limit on the amount an individual employers account can be topped up
  3. PAYE most preferred method for collecting the levy
  4. The most frequent suggestion for a measure of calculating the size of firms was to calculate it by the number of employees. However, many respondents commented that “number of employees” is a crude measure since company size does not necessarily correspond with either the ability to pay the levy or with the number of apprenticeships an employer can offer
  5. Most respondents felt more information on the model was required
  6. Training providers should be registered and subject to approval/inspection
  7. Respondents were evenly split over whether the funding should be used only for direct costs of an apprenticeship training and assessment.


Closer look at some questions and concluding remarks:

In your opinion, how should the size of firm paying the levy be calculated?

Most respondents have asked for further information on:

  • Which type of employees would count in the measure
  • What the levy rate will be, and
  • How this measure would apply to employees/employers operating across the UK


  • The rate for the levy will be set at 0.5% of an employer’s pay bill and will be collected via PAYE.
  • Employers will receive an allowance of £15,000.

The effect of this allowance is that the levy will only be payable on pay bill in excess of £3,000,000 – employers with a pay bill less than £3,000,000 will not pay anything.

How should the England operations of employers operating across the UK be identified?

Government is going to make a conscious effort to ensure that the scheme is not complex and administrative burdens are kept to a minimum, providing clear guidance.

How long should employers have to use their levy funding before it expires?

The Government has stated it will use the time between now and the implementation of the levy to work closely with employers and training providers on the practicalities of how and when funds will flow through the system to best support employers’ training needs and apprenticeships of different lengths.

Limiting top-ups

Employers will be allowed a reasonable time to use the funding available in their accounts, however a specific time frame has not been committed to in the Government’s concluding remarks. What is stated is that where employers choose not to use the funds in their digital accounts, these funds will be made more widely available.

Quality assurance for apprenticeships

To ensure employers drive quality in the apprenticeship system the Government will establish the Institute for Apprenticeships, a new independent body, led by employers, to regulate the quality of apprenticeships within the context of achieving three million starts by 2020.

An independent Chair will lead the work of the body, supported by a small Board made up primarily of employers, business leaders and their representatives, to ensure employers continue to improve apprenticeship quality at the highest level.

Building on the current Trailblazer processes, the body will put in place transparent mechanisms for the approval of apprenticeship standards and assessment plans, and maintain clear quality criteria so that only standards that are valued by employers will be approved and funded. The body will use data showing the take-up of apprenticeships by employers and the concrete wage returns to apprentices to review the effectiveness and quality of standards over time.

Employers will continue to design new apprenticeships and they will engage directly with the body to submit their standards and assessment plans for approval. These will be peer reviewed by a small number of experts to ensure they meet the published quality standard before being approved for publication. The body will also support the work of BIS and DfE in setting a cap on the level of funding available for each apprenticeship standard.


Government has already ‘built-in protection’ to the system through the creation of a lead provider model, which sees the lead provider accountable to the employer and government for quality and funding.

Government is now considering how it will be able to allow those employers who also wish to use multiple providers or take on functions themselves, it appears this will be a consideration and possibility once the scheme is established.

Do you agree that apprenticeship levy funding should only be used to pay for the direct costs of apprenticeship training and assessment?

If not, what else would you want vouchers to be able to be used for and how would spending be controlled or audited to ensure the overall system remains fair?

Respondents were conflicted over what costs the funding should be allocated to. The Government has stated this is therefore the rationale for the 0.5% rate, as enabling the funding levy to be used for wider, non-direct training costs, would have required the rate being set significantly higher.

Wider costs will therefore need to be accounted for outside of the funding provisions.

The Government is now considering how the funding levy might be used to help employers with the costs of traineeships.


Posted by Sue Robinson on 04/12/2015