The new apprenticeship funding system is not expected to be rolled out to all employers until 2019, TES can reveal.
In an exclusive interview, skills minister Nick Boles (pictured) said that while the levy was on target to be introduced in 2017 with a new digital voucher system, the current funding system would continue for non-levy payers for "a couple of years more".
Mr Boles told TES that while the exact timescale for the switchover was not yet decided, he expected it to be up and running by the end of the Parliament in 2020.
The two-stage introduction of the new system was predicted by TES earlier this month, and confirmed last week by Nadhim Zahawi, the prime minister’s apprenticeship adviser, at the FE Week Annual Apprenticeship Conference in Birmingham.
Less dramatic change
"It’s not a phased introduction of the levy; it’s a phased introduction of the digital system for the way apprenticeships are funded," Mr Boles said. "So basically the levy will come in in April 2017…from that moment on, large employers who pay the levy…will have digital accounts with the money in. They will then spend that with training providers on apprenticeships.
"But with those employers who are not paying the levy, their apprenticeships will continue to be funded in the way they currently are, so training providers, colleges and others will get contracts to provide apprenticeships, and they will then work with small employers to do that. It just means there is less of a dramatic change both for training providers and for small employers who are not paying the levy. The system will continue for a couple of years more, just as it is now.
"We don’t yet know exactly what [the timescale will be] but I would guess that by the end of the Parliament in 2019-20, everybody will be in the digital system."
A document outlining more details about the levy is expected next month, Mr Boles added.
He also told TES he was confident the Department for Business, Innovation and Skills would hit its target of introducing the levy in April 2017. "It’s ambitious, but we seem to be making good progress…There may be some refinements that come on stream later, but all of the main functions of the system will be in place for April 2017."
Call for a cap
The news was welcomed by the Association of Employment and Learning Providers. “We think that this is a sensible approach given that there are big questions which remain unanswered about how non-levy payers will be funded,” a spokesman said. “We hope now that the government will also reconsider its proposals for a cap system for funding and will instead stick to the existing funding rate system which is much easier for employers and providers to understand and follow.”
During last year's spending review and autumn statement, chancellor George Osborne announced that a levy on companies to fund apprenticeships would be set at 0.5 per cent of an employer's pay bill. It is expected to raise £3 billion in an attempt to fund 3 million apprenticeships during the current Parliament. The government says the levy will only be paid on employers' pay bills over £3 million, resulting in fewer than 2 per cent of UK employers paying it.