ESFA to consider scrapping levy transfer funding restriction for 16-18 year-old apprentices

A funding rule that is preventing large employers from transferring levy funds to smaller employers to train 16 to 18-year-old apprentices is being reviewed by the Education and Skills Funding Agency.

Keith Smith, the agency’s director of apprenticeships, revealed this was an area he hopes to address “quite soon”, during today’s Association of Employment and Learning Providers conference.

Under apprenticeship funding rule E189, it states that a “transfer of funds will not take place where the receiving employer is eligible for full government funding, because they have fewer than 50 employees and the apprentice is: 16 to18 years old; or an eligible 19 to 24 year old”.

We would be delighted to see it out there in the market from the beginning of April

One provider that has been lobbying to get this changed is the London Hairdressing Apprenticeship Academy.

Its co-founder and director, Trevor Luker, told FE Week: “In the levy transfer system, giving employers can’t pass their funding over to receiving employers if the receiving employer has less than 50 employees and intends to employ a 16 to 18, or a 19 to 24 supported EHCP apprentice because the funding rules don’t permit that transfer.

“In essence we’ve been trying to lobby to get that rule changed because we work in a particular sector where there is a large levy paying employer who wants to benefit and give their levy money to supply chain partners, but can’t do if that partner is a micro employer.

“Their only recourse to having funding for 16 to 18 and 19 to 24 apprentices will be to go to a training provider with a non-levy contract and fund it in that way.”

He added that there was “clearly there is an issue in the market with non-levy funding contract values at the moment”.

When asked why this was the case and whether it could be changed by AELP chief executive Mark Dawe, Smith said: “I was talking to a colleague someone in the audience about this earlier today and they asked the same question, and on that I think that is absolutely fair, I think we need to look at that.

“What we was trying to do before was to, and what policy was trying to say was ‘look these people get no monetary gain, so why put it into the system’. And actually looking at the wider view it makes the system work better and it creates more younger apprentices, so why not.

“So I think we’re looking at it, it is one of those things again which I’m hoping quite soon we’ll come out with something.”

Luker said he was “delighted” to hear this.

“They are looking at that possibly because the rule sets about that dichotomy between levy contribution and the employer making the contribution, and small employers not having to make it,” he told FE Week.

“I think it was an unintended consequence that led about in essence a clash in real rule terms.

“They’re making a change, or going to look at it, and we would be delighted to see it out there in the market from the beginning of April because we have got large levy paying employers that want to help supply chain partners.”

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