The latest apprenticeship funding rules introduce several updates to the Growth and Skills Levy, including changes to co-investment, levy expiry and an increase in funding for younger apprentices.
Most employers don’t need to read through the government guidance in full, but understanding the key changes can help you plan ahead and make the most of the funding available.
Five changes worth knowing about
1. Co-investment is increasing for some levy-paying employers
Levy-paying organisations will continue to fund apprenticeships through their levy account as usual. What’s changing is that if those funds are exhausted, employer co-investment for new apprenticeship starts increases from 5% to 25% as of August.
It’s worth reviewing your levy balance and future plans, with co-investment increasing once levy funds are exhausted, planning ahead could help avoid unexpected costs.
2. Levy funds will expire sooner
New levy funds will now expire after 12 months instead of 24 months if they are not used. Existing levy funds in employer accounts before the 1st will keep the original expiry period, but new contributions from this date onwards will follow the shorter 12-month window.
This is one of the biggest practical changes for levy-paying employers, with new funds expiring much sooner than before, making it even more important to plan your apprenticeship starts throughout the year.
3. Increased support for younger apprentices
Amongst the changes comes 100% government funding for apprentices aged 16 to 24 (up to the funding band maximum) for non-levy organisations. For apprentices aged 25 and over, employers will continue to invest 5%, with the government funding the remaining balance.
If you’re an SME thinking about recruiting or developing early-career employees, this change could significantly reduce the cost of doing so.
4. The 10% government top-up is ending
The government will no longer be adding the 10% top-up previously applied to new levy funds entering employer accounts.
This means that although employers will continue contributing the same amount to the levy, there’ll be less funding available overall. If you’re planning future apprenticeship starts, it’s something to keep in mind.
5. Apprenticeship assessment continues to evolve
The way apprentices are assessed is also evolving. As updated apprenticeship standards are introduced, assessment will become more integrated throughout the programme instead of relying solely on a traditional end-point assessment.
These changes will be introduced gradually, but they’re worth being aware of when planning future apprenticeship starts.
How employers can prepare (a checklist)
Although these changes don’t require immediate action, now is a good time to review your workforce development plans.
Consider:
- Understanding how the new funding arrangements could affect your budget.
- Reviewing your levy balance and future training plans to avoid unspent funds expiring under the new 12-month timeframe.
- Reviewing your apprenticeship pipeline for the coming year and identifying priority skills gaps.
- Exploring opportunities created by fully funded apprenticeships for eligible younger learners.
Where to go from here
Most of these changes won’t affect day-to-day operations immediately. However, understanding them now will help you make informed decisions over the coming year.
Every employer’s situation is different. Whether you’re looking to maximise your levy investment, develop young talent or upskill your existing workforce, our team can help you understand what the new funding rules mean in practice.
Get in touch to discuss your plans and explore the apprenticeship programmes that best support your organisation.