Apprenticeship update 27 10-16

An Apprenticeship Updatea Guide for Employers and Training Providers

27th October 2016

WHY? Rationale for ReformsRationale for Reforms

Employer Driven Employers designing

apprenticeships to make them more responsive to

their needs and the future economy, and controlling funding

Simplicity Simplifying

apprenticeship standards so that they are shorter

and more accessible

Quality Improving the quality of apprenticeships so that

they are viewed with the same esteem as

University

Apprenticeship Funding and the Changes planned

Provider control

• Provider funded for delivery of Specification of Apprenticeship Standards for England (SASE) framework

• Employer contribution expected but not always collected

Transition

• Employers have more control over content of Standards• Funding partially to employer (incentives) and provider• Employer contribution in cash

Employer control

• Content and delivery controlled by employer• Large employers pay 0.5% paybill tax as levy with a 10% top-up • Employer uses digital voucher to pay for training and assessment

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Final funding levels announced on the 25/10/16 include:

• Higher funding for STEM apprenticeship frameworks and higher pricing of apprenticeship standards to support improved quality, and greater flexibility to train those with prior qualifications;

• Longer period of time for employers to spend funds in their digital account, now with 24 months before they expire, an increase from our original proposal of just 18 months;

• There is a commitment to introducing the ability for employers to transfer digital funds to other employers in their supply chains, sector or to apprenticeship training agencies in 2018

• A 90 per cent contribution from government to the cost of training for employers that will not pay the levy; meaning a contribution of 10% for SMEs

Final funding levels announced on the 25/10/16 include:

• A 100 per cent contribution from the government to the cost of training for small employers, that will not pay the levy and who take on apprentices who are 16 to 18 years old, 19 to 24 year old care leavers, or 19 to 24 year olds with an education and health care plan;

• £1,000 each from government to employers and training providers when they take on 16 to 18-year-olds, 19 to 24-year-olds who were in care or who have an education and health care plan;

• Help for training providers to adapt to the new, simpler funding model through an additional cash payment equal to 20 per cent of the funding band maximum where they train 16 to 18 year olds on frameworks; and

• A simplified version of the current system of support for people from disadvantaged areas, to ensure the opportunity to undertake an apprenticeship is open to everyone, no matter where in England they live, their background or family circumstances.• an important intervention from the new apprenticeships minister, Robert

Halfon.

Subcontracting saved in final apprenticeship plans

The proposals published in August stated that the main provider would need to directly deliver at least half the training for each apprentices.• However, it has been announced that “At the employer’s request, and subject to

their agreement, main providers will be able to bring in subcontractors to deliver whole, or parts of, frameworks or standards.”

At the moment we are not sure what evidence will be required for this. • Nevertheless the main provider will have to directly delver some of the training for

each employers apprenticeship programme – but will this will not need to be significant proportion.

• Providers with contract values below £100k will now not have to join the register (however, they still can apply if they wish to) – this requirement appears to have been dropped in the latest document release.

• The document released on the 25/10/16 states: “For the time being, we will retain the threshold, which means that organisations who want to deliver less than £100k of apprenticeship training per year as a subcontractor will not need to apply.”

Disadvantage Uplifts

• In the original proposal it was anticipated that Disadvantage uplifts would go.• Which would have been circa 32% additional

funding for those living in the most deprived areas being removed.

• As reported in the FE Week the Apprenticeship Minister as stated that that the government will be “investing £60 million in supporting the training of apprentices from the poorest areas in the country to ensure social mobility for all.”

Disadvantage Uplifts

According to government sources• “Overall, government will make available at least the same amount on disadvantage

payments as under the current system of more complex uplifts” • “These payments will come direct from the government and will not be deducted

from an employer’s digital account”• “This will be in place for the first year while we review the best ways of ensuring

apprenticeships provide equal opportunity to all, regardless of their circumstances. This review will look at the role of employers, as well as training providers, and the differences in approach that may be needed in different parts of the country. We will work with Opportunity Areas to develop and test different approaches”

Deprived Area as applied in the Index of multiple Deprivation

Uplift

Apprentice who lives in Top 10% Deprived Area £600

Apprentice who lives in the next 10% Next 11-20% Deprived Area £300

Those Apprentices in the next 7% Next 21-27% Deprived Area £200

Proposals in August Final Policy

Expiry of digital funds after 18 months Extended to 24 months – helping employers to prepare for the new system and to adapt training programmes

Support for 16-18 year old apprentices - £1000 payment to employers and training providers

Retaining the £1000 payments plus extra government funding to provide a transitional 20% uplift for providers training 16-18 year olds on a framework. Also applies to 19-24 year olds formerly in care or have a Education and Health Care plan

Removal of disadvantage uplift Retain a simplified version of current system for one year to support those from disadvantaged areas whilst review best way to support disadvantaged groups

Key changes since August

• In August, we published our proposals for apprenticeship funding. Since then, we have been listening to employers, training providers and other stakeholders to help us develop our final position. The adjustments we have made will help ensure that the reforms benefit more employers and apprentices.

Funding Example - The way it is Now

Skills Funding Agency

Training Organisation

Learning / Assessment

Awarding Body

Apprenticeship Business Administration Level 2 16-18 19-23 24+Drawdown (Per Learner) Pearson Edexcel FS English Level 1 £776.35 £362.00 £289.60Pearson Edexcel Functional Skills qualification in Mathematics at Level 1 £776.35 £362.00 £289.60Pearson BTEC Level 2 Diploma in Business Administration ( QCF) £4,270.97 £1,991.50 £1,593.20Drawdown £5,823.66 £2,715.50 £2,172.40Total Drawdown (Inc. Avg Uplift of 10%) £6,406.03 £2,987.05 £2,389.64

Apprenticeship Customer Service Level 2 16-18 19-23 24+Drawdown (Per Learner) Pearson Edexcel FS English Level 1 £776.35 £362.00 £289.60Pearson Edexcel Functional Skills qualification in Mathematics at Level 1 £776.35 £362.00 £289.60Pearson BTEC Level 2 Diploma in Customer Service ( QCF) £3,594.35 £1,676.00 £1,340.80Drawdown £5,147.04 £2,400.00 £1,920.00Total Drawdown (Inc. Avg Uplift of 10%) £5,661.74 £2,640.00 £2,112.00

Funding Drown Down by the Provider from the Skills Funding Agency

Awarding Body Registration and Certification Fee

£175

Awarding Body Registration and Certification Fee

£175

English Mathematics Main Learning Aim

Area and Disadvantage

Uplift Multipliers

= Total Funding

Drawn Down

Funding and delivery comparisonThe way it is Now

Proposed Plans




Awarding Body

Employer Contribution (Levy)

SME payment

DAS/ Skills Funding Agency Employer


This could be the Employer

Awarding Body

Assessment 20% of the

Funding

Learning 80% of the Funding

to also include Awarding Body fees for any qualification within the new

Standards

Employer Pays LEVY to HMRC no mater if they access apprenticeships or not

Funding ExampleProposed Plans

Employer Contribution (Levy)

SME payment

DAS/ Skills Funding Agency

Employer



Awarding Body

Learning £1,200 of the Funding

to also include Awarding Body fees for the embedded qualification which is

anticipated to be Circa £150 leaving £1,050 for Training + any uplift

Employer Pays LEVY to HMRC no mater if they access apprenticeships or not

Learning £1,600 of the Funding

to also include Awarding Body fees for the embedded qualification which is

anticipated to be Circa £150 leaving £1,400 for Training + any uplift

End Point Assessment

c£400 of the Funding (this will have to be paid out

before you can draw down funding

Customer Service Level 2 £1,500 there is no additional uplifts for learner age or being within London

Note: Fees dependant on individual awarding body and assessment organisation fees

End Point Assessment

c£300 of the Funding (this will have to be paid out

before you can draw down funding

Administration Level 2 £2,000 there is no additional uplifts for learner age or being within London

Maths and English Additional Funding Outside of employer contribution £471 for each

Maths and English Additional Funding Outside of employer contribution £471 for each

Funding and Delivery Comparison for SMEsThe way it is Now

Proposed Plans




Awarding Body

Employer Contribution SME

payment

DAS/ Skills Funding Agency Employer



Awarding Body

Employer Pays 10% of training Fee to the Provider

The Provider Draws Down 90% of the funding from the Skills Funding Agency

The Provider Pays for the End Point Assessment and delvers the training

Example: Administration Band £2,000Employer Pays £200+VATGovernment Pays £1,800

What about non Levy payers? Co-Investment

There are two types of employers who will benefit from government support towards the cost of their apprenticeships training:• Employers who haven’t paid the

levy and want to purchase apprenticeship training from a provider

• A levy-paying employer who with insufficient funds in their digital account to pay for the cost of training and assessment they want to purchase

• The government will pay 90% of the costs of training and assessment.

• The employer will be responsible for paying 10% of the costs.

Government 90%Employer 10%

Purchasing Training - Summary

Levied employers buying training from May 2017• Can commit to apprenticeship starts from the beginning of May • Funds will automatically leave the digital account on a monthly basis• The cost will be spread over the lifetime of the apprenticeship• The SFA will hold back 20% of the total cost, to be paid on completion of the

apprenticeship.

New funding system comes into effect on 1 May 2017• Apprenticeships started before 1 May will be funded through to completion

according to the existing rules

Non-levied employers buying training from May 2017• Continue to make payments direct to providers• Move onto the digital system at a later date

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We will allocate each individual framework pathway to:

• the nearest funding band based on the current rate of funding the government pays providers for training adult apprentices but with some extra support…

Funding bands for frameworks

16-18 uplift• Transitional support of 20% of funding band

maximum paid directly to training providers • Also applies to 19-24 year olds formerly in care

or have Education and Health Care plan

STEM Support

Additional support in areas of disadvantage

• For all STEM framework pathways we will increase the current government-funded adult rate by 40% at Level 2 and 80% at Level 3 and above, and then allocate these frameworks to the nearest funding band.

Training providers receive:• An additional £600 for training an apprentice

from top 10% of deprived areas, £300 for next 10% range and £200 for the next 7% range

Apprenticeship standards are employer-designed and offer employers and apprentices a more robust and relevant training experience.

Recognised in the funding system by allocating higher funding bands to apprenticeship standards, relative to equivalent frameworks, where appropriate.

Funding bands for standards

Principles

• Lower cost standards should be allocated to the nearest funding band• Those standards currently assigned to the widest and highest cost funding band will be allocated to a new

band within this range. Taking into account:• Actual prices employers have negotiated with providers.• Evidence from Trailblazer employers on the estimated costs eligible apprenticeship training• The funding bands set for equivalent frameworks• The level and nature of the training, and consistency across similar types of apprenticeship standard.

Existing apprenticeship standards have been allocated to new funding bands according to the following principles:

16-18 year olds

Government will pay £1,000 to employers, and a further £1,000 to training providers if

they train a 16-18 year old apprentice

Disadvantaged young people

Government will pay £1,000 to employers, and a further £1,000 to training providers if

they train 19-24 year olds leaving care or who have a Local Authority Education and

Healthcare plan

Additional learning support

We will pay training providers up to £150 a month to support these learners, plus

additional costs based on evidenced need

English and Maths training

To meet minimum standards of English and maths we will pay training providers £471 for

each of these qualifications (Level 1 and 2)

Small Employers

Employers with fewer than 50 employees will have 100% of the training and assessment costs

covered when training a 16-18 year old (or 19-24 year old formerly in care or has a Local Authority

Education, Health and Care plan

Additional Support

Prior Qualifications

Now and in the future, you can train any individual to undertake an apprenticeship at a higher level than a qualification they already

hold.

From May 2017, an individual can be funded to undertake an apprenticeship at the same

or lower level to acquire substantive new skills

Cross-border funding

Applying a single test for funding through the English system: based on whether the

apprentice’s main place of employment is England.

‘Workplace’ is where the apprentice is expected to spend the majority of their time

during their apprenticeship.

Transferring funding

During 2018 the Government will introduce means for employers to transfer up to 10% of

the levy funds to another employer with a digital account, or to an ATA.

New employer steering group to design this system so that it meets their needs

Funding rules

Contracts

• Once a provider has been selected by an employer to deliver training to their apprentices, they will need to negotiate costs ensuring contracts are in place so that the funding can flow.

• The costs for end point assessments will be included in the total price for the apprenticeship agreed with the employer. • Providers will be required to pass this

agreed amount on to the assessment organisation selected by the employer.

Working with levy-paying employers

Employer A Employer B (C.D.E . . . )

Subcontractor if Selected


End-point assessment organisation

(standards only)

Provider

All providers need to be listed on the Register of Apprenticeship Training Providers

Contract for Service



Contract for Payment

Provider Agreement

Term

s &

Con

ditio

ns +

Empl

oyer

Agr

eem

ent

Apprenticeships – employer A

Apprenticeships – employer B (C, D, E…)

Funding Comparison The Hard Facts

Please note: • Disadvantage uplifts have been protected and range from £200 - £600 for those qualifying• Extra 20 per cent of funding band limit for 16-18 year-olds (in addition to the £1,000 provider and

£1,000 employer incentive)

For 16-18 year olds the position is worse however, this is offset by Employer and Training Providers each being paid £1,000 in the form off an age grant for this group (SMEs Only) . (Although we can not confirm all the eligibility criteria at this stage)

Business Administration Level 2How it is Now Post April 2017

English £475.98 £471.00Maths £475.98 £471.00Diploma in Administration £2,618.56 £2,000.00Uplift (Average) £357.05 £0.00Drawdown £3,927.57 £2,942.00Loss of Funding £985.57Income Reduction 25%Awarding Body Fee -£175.00 -£150.00End Point Assessment £400.00Left for Delivery of Training £4,102.57 £2,692.00Loss of Funding Going into Training £1,410.57

Drop in Funding Available for Training (average) 34%

Customer Service Level 2How it is Now Post April 2017

English £475.98 £471.00Maths £475.98 £471.00Diploma in Customer Service £2,203.72 £1,500.00Uplift (Average) £315.57 £.00Drawdown £3,471.25 £2,442.00Loss of Funding £1,029.25Income Reduction 30%Awarding Body Fee -£175.00 -£150.00End Point Assessment £300.00Left for Delivery of Training £3,646.25 £2,292.00Loss of Funding Going into Training £1,354.25

Drop in Funding Available for Training (average) 37%

Current Position Employer AGE Grants

Current Position• AGE Grants

• Apprenticeship grant for employers of 16 to 24 year olds £1,500• However,

• Employer have to employ fewer that 50 employees• Is issued on a first-come, first-served basis within a training

organisation’s allocation of Grants• You can only claim up to 5 Grants during the time the Grant is

available. • commit to employ your apprentice(s) for a minimum of 12

months on the apprenticeship programme or the time it takes them to complete their apprenticeship, whichever is the greater

Current Position Employer AGE Grants

Current Position• AGE Grants

• Apprenticeship grant for employers of 16 to 24 year olds £1,500 under the new scheme this will be reduced to £1,000 although and additional £1000 will go to the training organisation

• However, • Employer have to employ fewer that 50 employees• Is issued on a first-come, first-served basis within a training

organisation’s allocation of Grants• You can only claim up to 5 Grants during the time the Grant is available. • commit to employ your apprentice(s) for a minimum of 12 months on

the apprenticeship programme or the time it takes them to complete their apprenticeship, whichever is the greater

Current Position Employer Grants

Local Schemes• Many Councils including London offer incentives to employers an

example is Birmingham City Council • £1,500 for recruiting in to an apprenticeship vacancy for SME’s• Learners must be • 16 to 18 years old and not in employment, education or

training (NEET) (self declared): or• 18 to 24 years old unemployed for at least 1 day (self

declared).• Many other areas offer incentives and you should ask your

provider or local council for more information

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What is the digital apprenticeship service?

National Apprenticeship Service

Recruit an apprentice

gateway.gov.uk

October 2016

• Publish funding bands that apply in the new system• Full set of technical rules that underpin the funding system• Calculation for English proportion• Pilot testing with employers • Register of Apprenticeship Training Providers open

November 2016

December 2016 • Further employer guidance from HMRC on how to calculate and pay the apprenticeship levy

January 2017 • Employers to register on the digital apprenticeship service

February 2017

March 20017 • National Apprenticeship Week (6 to 10 March)

April 2017 • Levy paid

May 2017 • Service live• Make levy commitments

To 2020 • All employers to use the service

Key milestones 2016 - 2017 and on

Summary

• Final funding levels announced• Subcontracting saved in final apprenticeship plans• Maths and English attract £471 each • Disadvantage Uplifts protected in the short to

medium term• Additional learning support for training providers up

to £150 a month• Individuals can be funded to undertake an

apprenticeship at the same or lower level to acquire substantive new skills

Keep In Touch

Join our Apprenticeship Funding Forum for further information open to all Employer, Training Providers and others involved in the Apprenticeship Levy https://www.linkedin.com/groups/8551387

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