Government funding is chiefly aimed at supporting the full or part time learning of young people under 25 years old and some targeted adult learners
- Training providers generate extra income through commercial activities, such as tailor-made training for employers and consultancy.
- Funding mechanisms vary in each UK nation
- Funding ‘follows the learner’ and reflects enrolment, retention, achievement and progression. If learners are not successful on their course then funding will be withheld or may have to be repaid.
- Funding is used as a policy lever in the delivery of educational strategy, for example, through offering financial incentives to employers to hire apprentices with additional needs or by making funding conditional on meeting certain objectives such as meeting minimum attainment standards in core subjects like English and Maths.
- There is considerable pressure to get value for money from government funding. Training providers are increasingly expected to look for innovative and enterprising ways of generating income and reducing costs, while maintaining quality
The Apprenticeship Levy
In 2017, The UK Government introduced an apprenticeship levy of 0.5% of wages, that applies to all large UK companies with a pay bill over £3M. Currently, only 2% of employers pay the apprenticeship levy. Levy paying businesses can access their funds through an online apprenticeship service (account) which can be spent on apprenticeship training in England. The UK Government estimates and shares the annual levy pot to support training in the devolved administrations.
The levy includes funding of apprenticeship training for all employers. Smaller employers, with a total annual pay bill of less than £3million, pay 5% of the cost of their apprenticeship training and the Government pays the rest. Smaller companies contract directly with colleges and training providers, which allows employers a greater choice and voice in TVET. Levy paying employers can also transfer up to 25% of their levy funds to other employers. This aims to make sure the system is flexible, meets the needs of employers and will also help smaller businesses to invest in more training opportunities. Levy paying employers have up to 24 months to spend their levy funds. Any unspent levy funds within each financial year are redistributed to support existing apprentices, pay for apprenticeship training for smaller employers and additional payments required to support apprentices.