The Changing National Skills Funding Landscape. Cat Settle Head of Employer and Delivery Services, Skills Funding Agency

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1 The Changing National Skills Funding Landscape Cat Settle Head of Employer and Delivery Services, Skills Funding Agency

2 English Apprenticeships: Our 2020 Vision

3 A Programme of Reforms The government is committed to significantly increase the quantity and quality of apprenticeships in England to reach 3 million starts in 2020: New Institute for Apprenticeships led by employers to support quality apprenticeships Employers at the heart of designing new Apprenticeships Standards through the Trailblazer programme Apprenticeships will be given equal legal protection to degrees Abolishing employer NICs for apprentices under the age of 25 from April 2016 Apprenticeship targets for public sector bodies consulting on new duty on public sector to have 2.3% of its workforce comprised of apprenticeships But a step change in the scale and quality of the apprenticeship programme also requires a step change in funding and the introduction of an apprenticeship levy

4 Action is needed to address current trends

5 The Benefits of Apprenticeships Higher qualifications lead to improved employment prospects, productivity and wages for apprentices. Apprenticeships also offer excellent returns to employers and the taxpayer.

6 Funding Apprenticeships The Levy We have already increased the minimum wage for apprentices by over 20% to 3.30 in October The Government is introducing a levy on employers to fund apprenticeships. This will be collected through PAYE. Guidance will be provided in Spring Employers who pay the levy and are committed to apprenticeships will be able to get out more than they pay in via a top up in their digital account. Employers will be able to choose where to direct the funds in their digital account. Where employers choose not to, we will make these available more widely. Guidance on funding for frameworks and standards in 2016/17 was published in January.

7 Two worked examples Employer of 250 employees, each with a gross salary of 20,000. Pay bill: 250 x 20,000 = 5,000,000 Employer of 100 employees, each with a gross salary of 20,000. Pay bill: 100 x 20,000 = 2,000,000 Levy sum: 0.5% x 5,000,000 = 25,000 Allowance: 25,000-15,000 = 10,000 annual levy payment Levy sum: 0.5% x 2,000,000 = 10,000 Allowance: 10,000-15,000 = 0 annual levy payment

8 Getting out more than you put in Employers who pay the levy and are committed to apprenticeships training will be able to get out more than they pay in to the levy. The government will apply a 10% top-up to monthly funds entering levy paying employers digital accounts, for apprenticeship training in England, from April Worked example Employer has 12,000 annually entering their levy account Monthly account funding = 1,000 Top up: 10% x 1,000 = 100 Levy monthly account increase: 1, = 1,100 13,200 annually to spend on Apprenticeships

9 Government Training Provider Employer How the Levy will work Top up HMRC collect levy (PAYE) Employer has online account Employ Apprentice Pay for training with vouchers Receive training for apprentice Unused vouchers expire Our objectives: Employer control and simplicity Register with SFA (Ofsted) Offer apprenticeship training Receive vouchers (Digital Service) Provide training to apprentice Redeem vouchers Pass data on levy payments from HMRC to BIS Employer and Provider Identity Assurance Timely data on training Check training is complete If funding unlocked: Pay provider Our objectives: Get the machinery right to provide a quality service while protecting public purse

10 Apprenticeship Standards Pilot Funding Model

11 Apprenticeship Funding Model from April 2017 Final model for mainstream funding not yet decided, however we do know: Employers with a pay bill of less than 3m will not have to pay the levy. This is more than 98% of all employers. Those not in scope for the levy will continue to have access to government funding to support apprenticeships and will need to make a financial contribution to the cost of training their apprentices. This co-investment rate has not yet been set; but as an example in the apprenticeship standards funding pilot, this rate is 1 employer investment to 2 of government investment up to the cap for the standard. All employers will have access to the Digital Apprenticeship Service.

12 A Sustainable Long-Term Apprenticeship System The Institute for Apprenticeships will be an independent employer-led body that will regulate the quality of apprenticeships. It will be set up by April 2017 (shadow form from 2016). An independent Chair will lead a small Board of employers, business leaders and their representatives. The Institute will approve apprenticeship standards. Our reforms and the introduction of the levy will lead to an increased demand from employers. This provides new opportunities for agile providers. Outline role: o Approve/reject EOIs, standards and assessment plans o Provide advice and guidance during their development o Determine policy on when standards need to be refreshed or closed o Advise on funding for each standard

13 GATEWAY Requires employer sign-off Trailblazer Standards NEW APPRENTICESHIP MODEL APPRENTICESHIP PROGRAMME CONFIRMATION On-the-job training Off-the-job training (minimum 20%) Independent End Assessment (graded) Completion and Certification Employer groups can identify specifications which lead to qualifications (work-based learning and/or underpinning knowledge) Formative assessment of behaviours Maths & English

14 How Trailblazers Design Standards and Assessments Online Consultation Online Consultation Online Consultation Trailblazer forms & submits expression of interest Trailblazer writes new standard Assessment Plan Costing template/cap allocation Register of Assessment Organisations Delivery Approved by Gov t Approved by Gov t Approved & funding band allocated Monthly submission dates to BIS, and regular publication on gov.uk

15 Progression Routes Higher and Degree Apprenticeships

16 Standards Delivery so far Over 1400 businesses in over 100 sectors involved More than 200 standards published so far Around 60% of standards so far are for Higher and Degree Apprenticeships

17 Digital Apprenticeship Service The new Digital Apprenticeship Service will provide a new simple online portal for employers Proceeding with the Digital Apprenticeship Voucher To be implemented from 2017 as part of a broader end-to-end service that simplifies the employer journey and supports them to employ apprentices. Simplified solution Enabling employers to make decisions about taking on apprentices (for all apprenticeships and all employers including the smallest) Giving employers greater purchasing power and oversight of providers available Giving transparency on apprenticeship standards and their costs

18 Next Steps SPRING 2016 AUTUMN 2016 BY END 2016 APRIL 2017 HMRC published draft BIS publish final funding SFA publish final DAS in operation clauses for levy legislation rates funding rules New funding model Enterprise Bill and Finance SFA publish draft funding Full set of final funding implemented Bill Royal Assent rules guidelines published IfA in place BIS publish Levy Employer DAS Registration opens New ITB levy orders in Guide ITB consensus effect DAS alpha and beta phases consultation conducted BIS publish draft funding rates in June

19 How to Get Involved If you want to advertise an apprenticeship or find out about apprenticeships in your area you can visit If you want to provide any feedback on the apprenticeship levy, you can