The cap on apprenticeship starts for small employers will be reset to zero next month, the Education and Skills Funding Agency has announced.

It means that any non-levy paying business can start up to 10 new apprentices from 1 April 2021 regardless of the number they currently employ. The cap will be kept under review during the next financial year.

The move, revealed during today’s Association of Employment and Learning Providers spring conference, comes a week after an FE Week investigation found small employers were being blocked from new cash incentives for hiring apprentices after reaching the current limit.

AELP managing director Jane Hickie said the reset should be a “significant improvement” on the current situation but warned that without “transparency around levy funding, it’s difficult for us to judge whether the ESFA has been unduly cautious on changing the cap arrangements”.

Non-levy-paying businesses have been capped on the number of apprentices they can put through the digital apprenticeship service since January 2020 – starting with a limit of three before increasing to 10 in July – to ensure the overall apprenticeships budget is not overspent.

The digital service was launched in April 2017 but was only for levy-paying employers to manage and spend their apprenticeship funding.

Small employers will fully transition onto the service next month, meaning that all apprenticeship starts must now go through the system rather than procured non-levy contracts held by training providers.

Announcing the cap reset, the ESFA’s head of apprenticeship operations Jason Poole said: “The cap is there to help with the overall spend controls that we need to have in place for the whole apprenticeship programme.

“As we’ve moved away from individual provider contracts, we still need a way to be able to monitor and manage the flow of funding.

“As we are now moving from the beginning of next month to have all new starts on the service, I am really pleased to confirm that from April 1, we will be resetting that total.

“There are quite a lot of employers now who have started to use those reservations and an increasing number that have got up to their limit of 10.”

Apprentice “reservations” made by small employers before April which convert to starts beyond next month will not count in the new 10 pot. 

As Poole pointed out, the cap was first imposed owing to concern that the amount of money not being spent by levy payers wouldn’t be enough if the government allowed small employers to have as many starts as they wanted.

But, as providers and employers told FE Week last week, in the past year starts have dropped dramatically across England because of the pandemic and the overall apprenticeships budget is expected to be underspent this year.

Commenting on the cap reset, Hickie said: “This should be a significant improvement on the current situation.  For some months, AELP has been pressing the government to act on the employer frustrations being relayed to us by apprenticeship providers and today’s announcement should relieve the pressure. 

“Without transparency around levy funding, it’s difficult for us to judge whether the ESFA has been unduly cautious on changing the cap arrangements but there is no doubt that previous limits looked strange against Rishi Sunak’s measures to try and incentivise employers to offer more apprenticeship opportunities to young people.

“All the feedback suggests that the Plan for Jobs incentives will have by far the biggest impact among non-levy employers and so today’s changes make obvious sense.”

Poole also announced that the reservation period for employers who do not pay the apprenticeship levy is being extended from three to six months from 1 April 2021.

This means that these employers will be able to reserve funds up to six months before an apprenticeship is planned to start.


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