Kerrie Jones

5% co-investment

Created

Is the 5% co-investment calculated on the total cost of the apprenticeship or does 20% have to be deducted first? This is for a levy employer who has used their levy.

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Louise Tomkins

Hi Kerrie,

The 5% co-investment is 5% of the shortfall in their levy account, for example if the monthly OPP due was £200, but the employer only had £100 in their levy account for that apprentice, the ESFA would co-invest £95 and the employer would be required to pay the remaining £5 co-investment (£100 levy + £95 ESFA co-investment + £5 employer co-investment = £200 monthly OPP).

If the scenario was that they had no money in their levy account, the ESFA would pay £190 and the employer would need to be invoiced for the remaining £10.

Hope this makes sense.

Louise

Kerrie Jones

Hi Louise, they have no money in their levy account so we have to invoice 5% of the whole amount minus the 20% for EPA and completion.

Ruth Canham-James

Don't minus the 20% unless you decide not to invoice the 5% of the 20% until the end, which is a risky game, and more admin. For levy payers we know are never going to have any funds, we invoice 5% of the full price up front. 

Louise Tomkins

Almost all of our levy employers who need to co-invest go in and out of levy funds, so the values can change month by month so we invoice based on the shortfall.

As Ruth said, if you know they are highly unlikely to ever have funds in their levy account you can invoice up front for 5% of the full price but you need to be mindful that if the apprentice withdraws at any point you will owe the employer a refund.

Ruth Canham-James

Louise Tomkins We do the same with those who dip in and out of using up their levy, it's a right pain! We don't always invoice monthly as it can be £3.67, so we sometimes allow it to build up for 3 or 4 months. We then have an email template where we explain the situation, and give them a monthly breakdown of what they paid and what they owe, that goes to the employer.

And yes, you need a robust refund process, but that's the same for non-levy payers whose apprentices withdraw.

Kerrie Jones

Thanks, that's really helpful.

 

Mitchell Johnson

Hi, Sorry to jump onto this post. A quick related question. If a levy payer runs out of levy funds, is there a limit on how much co-investment they can make. (i.e does it revert back to reservations like with non-levy?) Thanks

Louise Tomkins

Not to my knowledge at present Mitchell, levy employers can continue to take on new apprentices even if their levy pot is already taken up by existing apprentices, no cap on numbers.

Ruth Canham-James

Mitchell Johnson No limits. It's a weird loophole that, if an employer was ever a levy payer, they keep their levy-payer DAS account indefinitely, even if they no longer pay the levy, and so they don't have to do reservations. If an employer was close to paying the levy, it's almost worth them hiring extra staff for a bit to tip them over into being a levy payer for a while. They then request to convert their account to a levy-paying account, but it can never be changed back again when they drop back below £3million, meaning they can hire more than 10 apprentices, don't have to do reservations, and don't have to pay the levy, just the 5% of each apprenticeship. I did get this confirmed by ESFA because it seemed so odd to me. It also means there's a chunk of funding ESFA will have to pay, but can't predict or control like they did with allocations, and now do with reservations. So, when we're recording ACT as 1 or 2, we're not actually recording whether they are a levy payer now, we're recording whether the employer has a levy-paying account, which is not always the same thing.

(Edited)

Mitchell Johnson

Ruth Canham-James thank you for the detailed response. That is a good loop hole indeed. Does it make any difference if a Non-levy employer get fund via levy transfer? Or when the transfered money runs out you back to reservations? Thanks

Ruth Canham-James

Mitchell Johnson I've no idea about transfers of funds I'm afraid, I've been fortunate enough to have avoided dealing with those so far.