The levy is being introduced to fund a step change in apprenticeship numbers and quality – delivering on the commitment that there will be 3 million additional apprenticeship starts by 2020. The levy will put apprenticeship funding on a sustainable footing and improve the technical and professional skills of the workforce (an important component of productivity).
The money will be collected by HMRC. Individual employers’ funding for apprenticeship training in England will then be made available to them via a new Digital Apprenticeship Service (DAS) account, through which employers will be able to pay for training for apprentices. The Service will also support employers to identify a training provider, choose an apprenticeship training course and find a candidate.
Employers with a pay bill of less than £3m will not have to pay the levy. This is more than 98% of all employers. These employers will continue to have access to government funding to support apprenticeships. We will provide further details on the support available later this year. All employers will have access to the Digital Apprenticeship Service whether they have paid the levy or not.
Employers will be free to spend their money on apprenticeships training which they judge best meets their needs. For example they could spend that on in-house apprenticeships training (if the employer is a registered training provider) which meets the required quality standards for an apprenticeship, or apprenticeships training offered by another registered provider of their choice. We want to give employers in England flexibility on how they use levy funds without introducing additional and unintended complexity into the system.