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Apprentice levy delays for small and medium dealers due to £1.2bn oversubscription

Arnold Clark apprentices

Small to medium sized dealer groups may experience a delay in receiving their apprenticeship funding due to the number of companies applying to access levy money.

The Government has paused the apprenticeship procurement process for training providers as the amount of small businesses that have bidded for apprenticeship funds has been exceeded by four times the amount of money made available.

The total applied for by non-levy-paying businesses (less than £3m annual payroll costs) is around £1.6 billion, compared to £440m available, FE Week reports

"We’re only a few days into this and we’re already running into issues and miscommunication. It doesn’t exactly fill you with confidence does it?" - Steve Nash

From April 6 this year, businesses with annual payroll costs of £3 million or more must pay 0.5% of their annual payroll bill, minus an allowance of £15,000, into a digital account towards the apprenticeship levy. Dealers will have 24 months from May this year to use the funding.

Businesses with a payroll below £3m only have to contribute 10% to the cost of an apprenticeship from April this year.

This meant the Government would pay 90% of the costs for 98% of employers, namely those with annual wage bills below £3m that don’t have to pay the levy.

Steve Nash, IMI chief executive, said: “We’re only a few days into this and we’re already running into issues and miscommunication.

“It doesn’t exactly fill you with confidence does it? The only way round this will be to access additional funding to fill the gap, but that’s never an easy task.

“While some levy payers may have been late to the party with accessing funds, I think they have now realised they can look to apprenticeships to utilise the money they are paying as part of the levy to fulfill training needs in other areas of the business.

“I don’t think the Government expected levy payers to be able to use all their funding in this way so they were banking on the overspill to help fund non-levy paying business’ apprenticeships. The Government has clearly got its sums wrong on this.

“The fact we weren’t contacted about the pause doesn’t surprise me. The lack of communication around the levy and important details being released at the last minute with no prior warning has become typical. We’re trying to make the best of the apprenticeship levy, but the Government isn’t making it easy.”

The IMI said there was no communication ahead of time from the Education and Skills Funding Agency (ESFA) to say it was going to pause the process.

The ESFA said: “This procurement was markedly oversubscribed, a sign of the significant level of interest from the training provider market in the apprenticeship reforms.

“In response, ESFA intends to pause the current competition for . This will allow us to review our approach to ensure that we achieve the right balance between stability of supply, and promoting competition and choice for employers.”

The ESFA said it would make an announcement “in due course” for how it will address the oversubscription.

> Apprenticeship funding proposals and apprenticeship funding calculator

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