The government plans to slash the amount smaller firms will have to pay towards the cost of apprenticeships training after the levy launch.
Employers of all sizes currently have to pay a third of training costs with the Skills Funding Agency agrees to covering the rest, under the pilot for new apprenticeships.
That means a £1 employer cash contribution returns £2 funding – up to a cap – for the relevant standard.
But FE Week has learned the government is looking at a making a much bigger contribution after April 2017 for employers not using their apprenticeship levy pot — either because their wage bill is too small to pay into it, or because it has run out.
For every £1 invested by such employers, we understand that the SFA will paying up to £9, according to plans set to be announced later this month.
This would mean providers are to be paid as much as 90 per cent from SFA coffers — although employers not paying the levy would still have to contribute around 10 per cent in cash first.
The news was welcomed by Mark Dawe, chief executive of Association of Employment and Learning Providers.
He said: “This sound like good news, as we believe smaller employers should pay as little as possible.
“We have been lobbying ministers about the need for a high-level of coinvestment by the government in respect of non-levy paying employers.
“These small- and medium-sized enterprises are needed to provide apprenticeship opportunities to young people in the big cities and smaller towns, or rural areas where the levy-paying employers are not always present.”
But he also cautioned: “For many small organisations, any contribution will be prohibitive and we hope the government will consider how it might support these smaller employers.”
The apprenticeship levy, first announced by the government last July, is due to be introduced in April 2017, and will be set at 0.5 per cent of an employer’s payroll.
Only businesses with a payroll of more than £3m – about two per cent of employers – will actually pay the levy.
But there has been widespread concern that non-levy-payers would be put off apprenticeships altogether, if they still had pay large sums towards training.
John Hyde, executive chairman of independent training provider HIT Training Ltd, who was given a CBE in the Queen’s birthday honours list, said: “If the 10 per cent contribution is confirmed, this is excellent news for smaller companies who already contribute substantially to the apprentices’ wages, lost opportunity costs, trading costs and more.
“The growth in the economy is through small- and medium-sized enterprises and the growth in apprenticeship numbers will follow.”
Teresa Frith, senior skills policy manager at the Association of Colleges, said the plan “could encourage employers, previously put off apprenticeships by the cost, to take on a young person and provide them with the skills to begin a career”.
“Small businesses are the lifeblood of our economy and the government must ensure they, and their staff, can also benefit from the funding created by the levy,” she added.
A BIS spokesperson would only say: “We set out earlier this year that more information would be available in June 2016. There is nothing further to add at this time.”