Insight#4. A new approach to apprenticeship funding€¦ · The levy Insight webinars for apprenticeships. 10 • From April 2017 levy on pay bill at a rate of 0.5%. • Levy allowance

Insight#4. A new approach to apprenticeship funding

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Insight webinars for apprenticeships.

#4. A new approach to apprenticeship funding

5 October 20162Insight webinars for apprenticeships.

Housekeeping

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For technical support during the eventUse the chat window and our support team will respond

We’ll go into more detail on topics later in the seriesWe’ll run further events every few weeks for as long as people find them useful.

Slides will be sent you post-event

Housekeeping

4Insight webinars for apprenticeships.

There will be a Q&A session at the end of the event.But your microphones are off by default.

You can ask a question at any time using the chat windowWe won’t answer immediately but will pause between sections to summarise key points of interest.

Interacting

5Insight webinars for apprenticeships.

Your presenters

Sian OwenHead of Stakeholder Relations

(Funding)

Anne AshworthApprenticeships Programme

Manager

Neil IngoeSenior Marketing Manager

(Event host)

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8 Funding – what is changing

15 Comparing old and new funding rates

19 Providing apprenticeships – the new register

22 Timeline

26 Wheretofindoutmore,andPearson summaries

29 A brief interview with Pearson – the levy payer

Today’s schedule

Insight webinars for apprenticeships.

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1. Funding – what is changing

• The levy

• How funding will flow

• Employer contribution

• Additional payments

• Funding rates

Funding – what is changing

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Non-levy

Levy

Contribution

Frameworks and standards

Frameworks and standards

Additional payments

Frameworks and standards

Rates

Frameworks Standards

Funding flow

Frameworks and standards

Frameworks and standards

The levy

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• From April 2017 levy on pay bill at a rate of 0.5%.

• Levy allowance to offset against this, of £15,000 each tax year, therefore payable on pay bills over £3 million (0.5% x £3 million = £15,000).

• Allowance operates on a monthly basis and accumulates throughout the year, so allowance of £1,250 a month, and unused allowance carried from one month to the next.

• For example, if your levy liability in month 1 is £1,000 you will not pay the levy and your allowance in month 2 will be £1,500.

• If you have unused allowance in a month, but paid the levy previously in the tax year, credit received which employers can use to offset against other PAYE liabilities. Credit will also reduce the amount of levy paid.

• Applies to employers across the UK but the levy to spend calculated based on home address of employees. Can be spent on employees whose main workplace is England.

• 10% top-up from government.

• Expires after 18 months.

• Government considering allowing employers to transfer 10% of unused funds to employers in supply chain or sector from 2018.

££££

Howthefundingwillflow

Insight webinars for apprenticeships. 11

Non-levy

Levy

• Employer contribution paid to provider according to agreed schedule, government contribution to provider paid via SFA contract.

• All employers will use DAS to pay for training and assessment by 2018 earliest, 2020 latest.

• Employer and government contribution into DAS, paid by employer to provider via DAS

Frameworks and standards

Funding flow

Employer contributions

Insight webinars for apprenticeships. 12

Non-levy

Levy

• For all age apprenticeships employers co-invest 10% and government co-invests 90% (mandatory).

• No funding reduction for apprentices aged 24+.

• Funding band is the maximum amount towards which government will co-invest 90%.

• Small employers (<50) do not have to co-invest 10%; government pays 100%.

• Employer pays 100%.

• Government tops this up by 10%.

• Once levy spent, employers use same model as non-levy payers.

Frameworks and standards

Contributions

Additional payments

Insight webinars for apprenticeships. 13

Levy and Non-levy

• 16-18 year-olds attract £1,000 to employer and £1,000 to provider.

• 19-24 year-old care leavers or with an LA EHC plan attract £1,000 to employer and £1,000 to provider.

• Small employers (<50) do not have to co-invest 10%. Government pays 100%.

• Flat rate of £471 for English and maths direct from government to provider.

• £150 each month can be claimed by providers from government for those with learning or physical disability requiring extra learning support. Where there is evidence of greater learning support needed additional funding may be provided.

• No area uplifts or disadvantage funding.

Frameworks and standards

Contributions

Funding rates

Insight webinars for apprenticeships. 14

Frameworks

Standards

Rates

Non-levy and Levy

• Individual framework pathways allocated to nearest funding band based on current rate of government funding for adult apprentices.

• For STEM framework pathways proposal is to increase the current government-funded adult rate by 40% at Level 2, and 80% at Level 3 and above, and then allocate to nearest funding band

• All apprenticeships will be allocated in one of 15 funding bands, upper limit ranges from £1,500 to £27,000.

• Upper limit of each funding band caps the maximum amount of digital funds an employer who pays the levy can use towards an individual apprenticeship, and the maximum price government will ‘co-invest’ towards where an employer does not pay the levy or has insufficient digital funds and is eligible for extra government support.

• Allocated to new funding bands according to principles: - Lower cost standards allocated to the funding band that most closely aligns with current

funding band standard is assigned to. - Standards assigned to widest and highest cost funding band, (£12,000 to £27,000) allocated to

new band within this range.

• New system will recognise standards are ‘more expensive to deliver’ by allocating higher funding bands to apprenticeship standards, relative to equivalent frameworks.

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2. Comparing old and new

funding rates

Comparing old and new: thedifferences

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• Basic funding rate.

• 16-18, 19-23, and 24+ and employer contributions.

• Small/large employers.

• Achievement/successful completion, and completion.

• Negotiation (standards only).

• Area uplift (frameworks only).

• Disadvantage funding (frameworks only).

• English and maths.

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Comparing old and new: template

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Employer 16-18 19-23 24+ 16-18 19-23 24+

Current Standard Framework

Small employer (< 50)EGT

N/A N/A N/A

All other employers

Large employer (> 1000) N/A N/A N/A

From 1-May Standard Framework

Non-levy, small employer (< 50)

Non-levy, all other employers

Levy

English and maths, area and disadvantage uplift, and learning support funding have not been included.

E – Employer pays, G – government pays, T – total funding to provider.

Comparing old and new: example

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Employer EGT 16-18 19-23 24+ 16-18 19-23 24+

Current Standard Framework

All other employers (i.e. > 1,000)

E £900 (£9,000 - £2,700 - £5,400)

£6,300 (£9,000 – £2,700)

Same as 19-23

£0 £8,160 (£16,318 x 0.5)

£8,160 (£16,318 x 0.5)

G £26,100 (£18,000 + £2,700 - £5,400)

£20,700 (£18,000 + £2,700)

£17,500 (£16,318 x 1.0723)

£18,610 (£16,318 x 0.5)

£6,530 (£16,318 x 0.5 x 0.8)

T £27,000 £27,000 £17,500 Min £8,160 Max £16,318

Min £6,530 Max £14,690

From 1-May Standard Framework

Non-levy, small employer (< 50) E £1,400

(£24,000 x 0.1 - £1,000£2,400

(£24,000 x 0.1)

Same as 19-23

-£100 (£9,000 x 0.1 -

£1,000)

£900 (£9,000 x 0.1)

Same as 19-23Non-levy, all

other employers G £23,600 (£24,000 x 0.9 + 2x £1,000)

£21,600 (£24,000 x 0.9)

£10,000 (£9,000 x 0.9 + 2x £1,000)

£8,100 (£9,000 x 0.9)

Levy T £25,000 £24,000 £10,000 £9,000

Level 3 Aerospace Manufacturing

Please refer to pre-meeting material - Comparing proposals for new apprenticeship funding with existing funding

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3. Providing apprenticeships – the new register

The new register

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The SFA will be changing the way they work with providers

From 1-May SFA procurement and contracting Digital apprenticeship service

Levy-paying employers N/A Purchase apprenticeship delivery direct from providers using DAS.

Non-levy paying employers

Be procured and contracted by the SFA for a transition period, until at least 2018, for apprenticeship delivery (as now).

Not use DAS to pay for apprenticeships until at least 2018.However, after the transitional period, will purchase apprenticeship delivery direct from providers using DAS in same way as levied employers.

In addition, all employers (levied and non-levied) will select one ‘lead’ or ‘main’ provider per apprentice

The new register

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• FThe SFA currently uses its Register of Training Organisations (RoTO) to obtain assurance about providers delivering publicly funded education and training.

• The SFA now want to provide assurance that is focused solely on apprenticeships, and allow employers to deliver training to their own employees.

• The SFA will introduce the new Register of Apprenticeship Training Providers (RoATP) and all providers must apply to join the RoATP if they want to deliver apprenticeships from May 2017.

• The SFA will run a procurement exercise for the delivery of apprenticeship training to non-levied employers until at least 2018 (i.e. until these employers join levied-employers and use the digital apprenticeship service to purchase training). The SFA expect this to be a one-off procurement.

• The RoATP will be separate from the Register of Training Organisations (RoTO), which will continue to operate for the Adult Education Budget and Advanced Learner Loans.

• Organisations currently on RoTO to deliver apprenticeships will need to apply to the new register if they wish to continue. There will be no automatic transfer from RoTO to the RoATP.

• Three application routes: - main route, - providers adding value to delivery of

apprenticeships, - employers who want to train their own employees (employer-provider).

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4. Timeline

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Transition – funding

Insight webinars for apprenticeships.

October 2016• Final funding information published (bands that will apply in the new system, final levels of government

support, additional support for 16-18-year-olds, English and maths payments, final full set of technical rules, confirmation of how proportion of pay bill paid to employees living in England will be calculated).

December 2016• Final funding information published (bands that will apply in the new system, final levels of government

support, additional support for 16-18-year-olds, English and maths payments, final full set of technical rules, confirmation of how proportion of pay bill paid to employees living in England will be calculated).

April 2017• Levy.

May 2017• New funding methodology.

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Transition – withdrawal of frameworks

Insight webinars for apprenticeships.

SFA expects to move from frameworks to standards over course of parliament (2020) with most frameworks being phased out and standards in place by the start of funding year 2017/18. Withdrawal phased and notice will be given

June 2016• 7 frameworks withdrawn.

July 2016• Consultation on further 55 frameworks to be

withdrawn from April 2017.

September 2016• List of frameworks withdrawn from April 2017

announced.

December 2016• 56 further frameworks withdrawn.

April 2017• 2 further frameworks withdrawn.

• 55 further frameworks possibly withdrawn (under review).

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Transition – digital apprenticeship service

Insight webinars for apprenticeships.

January 2017• Employers can create account and familiarise

themselves with DAS.

May 2017, all employers use DAS to• select apprenticeship framework or standard.

• choose training provider or providers.

• choose an assessment organisation.

• post apprenticeship vacancies.

May 2017, levy paying employers• See funds in DAS (shortly after declaration

to HMRC, and after 22 May).

• Set price agreed with training provider.

• Pay for apprenticeship training and assessment through DAS.

2018/2020• 2018 earliest and 2020 latest, all employers able

to use DAS to pay for training and assessment for apprenticeships

5.Wheretofind outmore,and

Pearson summaries

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Wheretofindoutmore

Insight webinars for apprenticeships.

Proposals for apprenticeship funding from May 2017• Proposals for apprenticeship funding from

May 2017: includes proposed funding bands for individual apprenticeship frameworks and standards.

A new register for apprenticeship providers, and a guide for employers• Proposals for a new Register of Apprenticeship

Training Providers: explains how organisations will apply if they want to deliver apprenticeship training from May 2017.

• Employer-provider guides: explains what employers need to do to become an apprenticeship training provider.

How the apprenticeship levy will work• DfE briefing on the Apprenticeship levy:

how it will work: updated and provides more information for levy paying employers.

Further information about the new apprenticeship system• Information on the apprenticeship levy: with

data broken down by size and sector and total apprenticeship budget.

• Online levy calculator: employers can use to estimate if they will pay the apprenticeship levy, how much an organisation will have available to spend on apprenticeships and how much government will contribute.

28Insight webinars for apprenticeships.

Wheretofindoutmore• Funding Focus – Apprenticeship funding after April 2017

• Funding Focus – Proposed allocation of frameworks and standards to new funding bands from May 2017

• Funding Focus – Comparing proposals for new apprenticeship funding from May 2017, with existing funding

• Funding Focus – Proposals for a Register of Apprenticeship Training Providers, and Guidance for employers wanting to become apprenticeship providers

• Funding Focus – Apprenticeship levy

• All on Pearson Funding News website.

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6. Pearson – the levy payer

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Questions

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