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<p>Since 2017, we have introduced substantial changes to the apprenticeship funding
system that make it challenging to predict the proportion of levy funds that will
be used this year and over the next few years.</p><p> </p><p>The apprenticeships system
is now employer-led and so employers can choose which apprenticeships they offer and
when. This means that the use of levy funds is a matter for individual employers.
We do not expect employers to use all of their levy funds, but they are able to.</p><p>
</p><p>The provider and employer market continues to adapt to the reforms to the apprenticeships
system that were made in 2017. We have also made additional changes to funding policy
this year, increasing the cap on transfers from 10% to 25% and are reducing co-investment
for small employers from 10% to 5%. The effect of these changes on behaviour will
only become apparent in the future.</p><p> </p><p>In combination, these factors mean
that it is not possible to make a single reliable estimate of future levy usage.</p><p>
</p><p>When the reforms were designed, we estimated that employers would use around
half of the levy funds available to them, on average, once the changes to the apprenticeships
programme had bedded in. However, levy-paying employers have taken on fewer starts
and used a smaller proportion of their levy funds than anticipated. Nevertheless,
we expect employers to use an increasing proportion of their levy funds as they continue
to develop their use of apprenticeships, and as a consequence of employers choosing
more higher-cost, higher-level apprenticeships since 2017.</p><p> </p><p>The forthcoming
Spending Review, announced by my right hon. Friend, the Chancellor of the Exchequer
at Spring Statement, will determine the level of funding for the apprenticeship programme
from April 2020. As part of this process we will consider any changes that may be
required to future funding arrangements, and the impact this might have on employers’
use of their levy funds. Until then it is not possible to estimate employers’ use
of their levy funds from 2020 onwards.</p>
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