Traineeships: Funding Reform in England BIS and DfE consultation

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1 Traineeships: Funding Reform in England BIS and DfE consultation Date 16 July 2013 Author Toby Hill LGiU/CSN Associate Summary Traineeships are a government-funded programme, first launched in August 2013, intended to provide support in acquiring work experience and workplace skills to young people who require extra help with the transition into employment Feedback through subsequent months has led the Government to adjust aspects of the programme, but it is yet to finalise its approach to the funding of Traineeships. In June 2014 BIS and DFE launched a consultation - Traineeships: funding reform in England - outlining options and proposals relating to this. The consultation closes on 14 August Traineeship funding is currently delivered using the same arrangements as for further education, rather than having its own specific approach. The consultation proposes that training providers are funded based on the trainee s progression into a job, apprenticeship, or further learning. This brief provides an overview of the development of Traineeships to date, before moving on to outline the proposals contained and questions asked in the latest consultation. This briefing is of interest to elected members and officers of local authorities becoming training providers and as employers, young people interested in Traineeships, and schools, charities and voluntary organisations that work with young people. Overview Traineeships are a government-funded programme, first launched in August 2013, intended to provide support in acquiring work experience and workplace skills to young people who require extra help with the transition into employment. They are delivered by a partnership between employers and education and training providers, and consist of three key components: A work placement A focused period of work preparation training (CV writing, interview preparation, interpersonal skills and so on) English and Maths (unless the young person has already achieved GCSE A*-C). In the light of feedback from the first six months, the government made a handful of changes to the original Traineeship template, changes which will come into effect for the 2014/15 year: Traineeships will no longer be subject to the 16 hour training rule for jobseekers There will be extended funding to enable eligible 24-year-olds to benefit from Traineeships

2 Training providers and employers will be given greater flexibility to design the work experience element of Traineeships. However, the government remains dissatisfied with the funding structure in place for Traineeships: Traineeship funding is inadequately linked to progression into one of three positive outcomes : a job, an Apprenticeship, or further learning Funding is excessively complicated, delivered through different routes for and year olds, forcing providers to navigate two funding systems to deliver a single programme. In order to address these concerns, the government launched a consultation in June 2014, titled Traineeships: funding reform in England. It outlines options and proposals for how Traineeship funding from 2015/16 should operate, exploring how outcome funding could best be introduced. It breaks down its suggestions into several categories, the most significant of which involve: Defining priority outcomes: For a job or Apprenticeship to count as a positive outcome and so trigger the release of funding - how long after the Traineeship has ended must it begin? And how long must the employment last for it to be considered sustainable? Payment Models: The consultation outlines four possible approaches to breaking down payments, each designed to incentivise positive outcomes English and Maths: Should funding for the English and maths component be included within the overall payments for Traineeships, or should it come through other mainstream funding routes? Widening eligibility: Should the eligibility rules for 19 to 24 year olds be changed so that 19 to 24 year olds can undertake a Traineeship if they are already qualified to a Full Level 2? Responses are invited until 14 August The government will publish its own response in Autumn 2014, giving training providers the opportunity to plan for the academic year 2015/16 with a clear understanding of whether outcome funding is going to be introduced and, if so, on what basis. Briefing in full Background Traineeships were conceived as part of the same family as apprenticeships, aimed at young people who have had little work experience and require extra help with the finding employment. They are not intended for the most disengaged young people requiring very intensive support. Development of Traineeships so far Traineeships were first outlined in the 2013 discussion paper Traineeships: Supporting young people to gain the skills for apprenticeships and other sustained jobs, which invited contributions from employers and education and training providers. Drawing on this consultation, the government then published a Framework for Delivery in May 2013 (See Related Briefings), which provided details on who traineeships would be aimed at, what they d consist of, and how they would be funded. The original Framework for Delivery outlined three core elements to the Traineeship programme:

3 A work placement A focused period of work preparation training (CV writing, interview preparation, interpersonal skills and so on) English and Maths (unless the young person has already achieved GCSE A*-C). It stated that Traineeships will last up to a maximum of six months. Within this, the work placement element should last between six weeks and five months. In terms of delivery, Traineeships will be a partnership between employers and education and training providers. The government was keen to launch the Traineeship programme quickly, setting an ambitious timetable of rolling them out in August Changes to the original model Following the original rollout for the 2013/14 year in August 2013, the government released an update to the framework for the delivery of Traineeships in May 2014, detailing a few changes that would take effect for the 2014/15 year. These included: Traineeships would no longer be subject to the 16 hour training rule for jobseekers From August 2014, there will be extended funding to enable eligible 24-year-olds to benefit from Traineeships Training providers and employers have been given greater flexibility to design the work experience element of Traineeships. For example, the original framework had stated that the work placement component must have a minimum duration of six weeks and a maximum of five months. The new guidance removed this regulation and replaced it with guidance that work placements will be expected to last between 100 and 240 hours, while acknowledging that longer placements may be necessary to prepare young people for work. Traineeship Funding Arrangements Alongside these specific changes, the government remains undecided how to finalise their approach to the funding of Traineeships. In order to launch the Traineeship programme quickly, and to enable providers to make a relatively straightforward transition to offering Traineeships, the government decided that from August 2013 they would make use of funding systems already in place. This meant that, through 2013/14 and 2014/15, funding for Traineeships was embedded in the existing mainstream funding arrangements, which are overseen by the Education Funding Agency for 16 to 18 year olds and by the Skills Funding Agency for the 19 to 23 age group. Problems with current funding arrangements The different funding routes for year olds and year olds have created notable differences in how the different age ranges engaged in Traineeships are allocated funding. For year olds, funding amounts are determined by the number of hours spent on the programme. For year olds, they are determined by the learning aims each trainee undertakes. Consequently, funding for the younger age group primarily rewards training providers for participation and retention, while funding for those aged 19 and over primarily rewards the achievement of qualifications or units.

4 The government has identified two problems with this: Traineeship funding has been linked to retention on the programme and qualification achievement rather than progression Providers have had to manage differences between two funding systems in order to deliver a single programme. Combating complexities in the funding of Traineeships In February 2014, the government outlined its concerns in the Skills Funding Statement, saying: we are considering how to better incentivise positive outcomes from Traineeships, in particular around jobs and Apprenticeships. At the same time we are looking at ways to achieve greater consistency in the way Traineeships are funded across provision. The government is currently developing the 2015/16 programme for the delivery of Traineeships, which creates an opportunity to deal with some of these inefficiencies in the funding of the Traineeship system. Traineeships: Funding Reform in England The government s latest document, Traineeships: funding reform in England, published in June 2014, aims to resolve these issues. It is a consultation offering a broad set of options and proposals for how Traineeship funding from 2015/16 should operate, and seeking views on how far these proposals would succeed in resolving the problems outlined above and realising the government s overall vision for Traineeships. It begins by highlighting the three main objectives of any changes to the Apprenticeship system: To ensure that the funding arrangements for Traineeships drive positive outcomes for young people To achieve greater consistency in the way Traineeships are funded for 16 to 18 year olds and 19 to 24 year olds To ensure providers have the flexibility to design high quality programmes that maximise outcomes for young people. The consultation contains 32 questions in total, the first two of which relate to these objectives: Question 1: Should Traineeships funding have a greater focus on positive outcomes than it does at present? Question 2: Is it important for successful Traineeship delivery to have greater consistency in funding arrangements between the 16 to 18 and 19 to 24 age groups? The consultation then breaks the issues down into six separate categories. This briefing summarises each category, embedding the consultation questions as they relate to each one. 1) Defining Priority Outcomes The purpose of a Traineeship is to support progression into an Apprenticeship, job, or further learning. In order to create outcome measures that enable it to implement a funding model that rewards positive outcomes, the government needs to have a clear definition of what constitutes each of these outcomes.

5 The consultation outlines five guiding principles to help clarify what counts as a positive outcome: achievability; timeliness (period of time during which the outcome must be captured); causality (Traineeships clearly contributed to Trainee s progress); and sustainability (of job etc. obtained.) The consultation adds that the job or apprenticeship must be undertaken for at least 16 hours a week. Self-employment should be considered a valid outcome, so long as the person s income is equivalent to 16 hours a week at the National Minimum Wage (NMW). Question 3: Are Apprenticeships, other jobs and further learning the right progression outcomes to reward? Question 4: Are the principles we are applying to the definition of job outcomes the right ones? If not, what alternative principles do you suggest? Question 5: Should the job outcome definition for Traineeships exclude employment under 16 hours per week? Question 6: Should the job outcome definition include self-employment, provided that the individual has an income equivalent to at least 16 hours per week at NMW? Employment Duration and Reference Period There are particular questions regarding how long the employment etc. has to last to count as a positive outcome (its duration), and how soon after completing the Traineeship it has to occur for it to be assumed that the traineeship was instrumental in making it happen (known as the reference period). There are several ways of organising this: A short reference period and employment duration: 4 weeks of continuous employment, within three months of completing the Traineeship A longer reference period and employment duration: 13 weeks of continuous employment within 6 months of completing the employment A two-stage measurement: treating progression into employment and the sustainability of that employment separately, with an initial progression measure after a short time period (e.g. 2 to 4 weeks), and a sustainment measure after (e.g.) 3 or 5 months of continuous work. Question 7: How far do the above examples above support the guiding principles above? Question 8: What do you consider to be the benefits and drawbacks of each approach? Question 9: In your experience, what proportion of trainees would you expect to progress into a) an Apprenticeship and b) sustainable employment? Further Learning The consultation suggests that for the sake of simplicity, the reference periods and duration for further learning should be aligned with those used for Apprenticeships and other job outcomes, generating the next five questions: Question 10: Do you agree that further learning should be defined using the same reference period as that for Apprenticeships and other jobs? Question 11: If not, what definition do you propose is used and why?

6 Question 12: Should further learning as an outcome be restricted to particular types or levels? Question 13: Please provide details of what type of further learning after a Traineeship should be considered an appropriate progression outcome and give reasons for your answer. Question 14: What proportion of trainees would you expect to progress into further learning? Capturing Outcomes Currently, the government requires providers to submit their own returns for outcomes arising from Traineeships. These can only be assessed on an aggregate level because, for legal reasons, it is not possible to use data in a way that potentially identifies individual learners. However, the government is attempting to legislate to remove the barriers to using matched data (data that illuminates outcomes on an individual as well as an aggregate level). Two questions arise in this context: Question 15: How do you track learner outcomes currently and what do you use as evidence to validate outcomes? Question 16: How could we use matched data now and in the future to support our understanding of outcomes for trainees? 2) Payment Models Having considered how outcomes will be defined and measured, the consultation moves on to consider how the government can fund against these outcomes. This new payment model is intended to: Have an increased focus on positive outcomes Introduce a standard funding rate across Traineeships (both and age groups) Be flexible and easily understood, and encourage accountability To achieve a balance between funding for outcomes while discouraging the support of individuals who already have a high chance of employment. Question 17: Are these the correct principles for an outcomes-based Traineeship funding system? Please outline the reasons for your response. The consultation moves on to outline four possible payment models: Approach 1: An engagement payment and a sustainable outcome payment: an engagement payment paid 2 to 4 weeks after the Trainee enrolled; and an outcome payment paid once a sustainable outcome is evidenced by provider Approach 2: An engagement payment, a milestone payment and a sustainable outcome payment: three payments; two the same as in approach 1, plus a milestone payment in between, paid once the Trainee has reached some particular milestone, e.g. 100 hours on a work placement Approach 3: A milestone payment and a sustainable outcome payment: the first payment paid after reaching a particular milestone, the second paid once a sustainable outcome is evidenced by provider.

7 Approach 4: An on programme payment and a sustainable outcome payment: on programme payments, paid monthly, followed by a single sustainable outcome payment. Question 18: Which of the four approaches do you believe would deliver the above principles most successfully? Please give reasons for your answer. Question 19: Are there alternative approaches that would better deliver the principles? Please justify your answer. Question 20: Do we need additional mechanisms to prevent any abuse of the flexibilities in the programme, which could lead to insubstantial and insufficiently stretching programmes? If so, what do you suggest? Question 21: Do you have any comments on the proportion of the funding that should be paid at each stage of the programme? 3) Funding for English and Maths for Traineeship A key component of Traineeships is that any Trainee without a GCSE grade A*-C in English and Maths must be enrolled on a GCSE programme, or on an alternative English and Maths qualification. The consultation outlines two approaches to funding this component: Option 1: Within Traineeship funding, where funding for English and maths is included within the overall payments for the Traineeship Option 2: Separate to Traineeship funding, where funding is not included in overall payments but is rather delivered through the mainstream funding for 16 to 19 study programmes and the 19+ Adult Skills Budget, depending on the age of the Trainee. Question 22: Which option do you consider will make it most likely English and maths learning will be stretching, and why? Question 23: Which option do you consider will make it most likely English and maths learning will be continued to completion after a Traineeship has finished, and why? Question 24: Which option will be easier to administer for training providers, and why? 4) Additional Elements of Funding Beyond direct funding for Traineeships, there are of course further types of support funding available, such as: Providers are funded to support learners through an uplift in relation to learners who live in disadvantaged areas and through funds to meet the costs of additional learning support Young people aged and are themselves supported financially through bursaries held by the provider. Support funding is administered differently to Traineeships, which could result in some differences of treatment depending on the learner s age. The bodies delivering this support are considering whether it would be better to bring consistency to learner support funding in the context of Traineeships. Question 25: Should the current arrangements for administering learning support funding to providers and financial support for learners continue to be applied to Traineeships from 2015/16?

8 Question 26: If not, what would you change as a means of bringing greater consistency to the way learners are supported across Traineeships in order to best support disadvantaged learners? 5) Provider Contracting Originally, given the desire to implement Traineeships quickly, the government decided that funding should be allocated and contracted through the following routes: year olds trained by Further Education providers as part of the funding-perstudent/study programme year olds trained by Apprenticeship providers, alongside their Apprenticeship contract year olds as part of the Adult Skills Budget. Clearly, this is a little fragmented, and the consultation raises the possibility of simplifying the Funding Agencies contracting and performance management arrangements for Traineeships. It emphasises that the government sees Traineeships as part of the Apprenticeships family, raising the possibility of applying to Traineeships the same contracting and performance management arrangements currently used for Apprenticeships for year olds and learners aged 19 and over. Question 27: Do you think that Traineeships funding should continue to be contracted through the existing arrangements, or aligned with the current Apprenticeship arrangements? Question 28: Will the contracting route influence the position of Traineeships alongside Study Programmes, Apprenticeships, or other programmes, and if so, how? 6) Widening eligibility for the 19-to-24 age group Current eligibility criteria mean that young people aged 16 to 18 can undertake a Traineeship if they are qualified below a full Level 3 or equivalent, whereas 19 to 23 year olds need to be qualified below a full Level 2 or equivalent. This acknowledges that people aged 16 to 18 are less likely to have had work experience than those aged 19 upwards. However, the consultation also acknowledges that some individuals aged 19 to 24 could benefit from a Traineeship despite being qualified to a full Level 2, for example, if their Level 2 did not include English and Maths A*-C and they lack work experience. On the other hand, provision already exists for young adults on Jobseeker s Allowance, which might be considered more suitable for 19 to 24 year olds who already have a full Level 2. And there is a risk that extending the eligibility might lead to places on Traineeships being offered to young people who are likely to be able to secure employment without this support, at the expense of those with greater need. Question 29: Should the eligibility rules for 19 to 24 year olds be changed so that 19 to 24 year olds can undertake a Traineeship if they are already qualified to a Full Level 2? Please justify your answer. Question 30: Should this depend on the nature of the Level 2 qualification and if so, how?

9 Question 31: Should this depend on whether a person has already reached a high enough standard in English and maths? Question 32: If a change is made, do you consider that it is necessary to make the change in 2014/15 or 2015/16? Next Steps The closing date for responses is 14 August Interested parties can reply online using Survey Monkey or an online form available electronically on the consultation page. The Government will analyse responses to this consultation and announce its conclusions during Autumn 2014, giving training providers and other interested parties the opportunity to plan for the academic year 2015/16 with a clear understanding of whether outcome funding is going to be introduced and, if so, on what basis. Comment The Traineeship programme emerged from a consensus around the need to provide young people with extra support in acquiring work experience and workplace skills. The first Traineeships began in August 2013, and 3,300 young people started them in the first six months. Learning from these experiences, the government has adapted the programme considerably since its launch. Some employers and providers complained that setting minimum and maximum durations for work experience in terms of weeks and months, as the government had initially done, could act as a barrier to tailoring placements to individual needs. For 2014/15 onward, the government has removed these rules and replaced them with a more flexible guideline. Similarly, the removal of the 16-hour rule for JSA claimants has been welcomed as making it easier to deliver Traineeships tailored to local needs and conditions. There had also been some disappointment that the programme was initially limited to 16 to 19 year olds. But the government was quick to rectify this, extending eligibility to 19 to 23 year olds, providing they are qualified below Level 2; from 2015/16, 24 year olds will also be eligible. Some providers have warned that the requirement for Trainees to be qualified below Level 2 has resulted in individuals who would benefit from the programme being turned away; the consultation provides an opportunity for people to raise this concern. These changes have been welcomed, then, but there remain some concerns that the latest consultation fails to address. One is the lack of any direct allowance paid to the trainee, an arrangement that was criticised following the original framework for delivery. The consultation raises the question of how this additional support should be administered, but does not suggest creating a Traineeship-specific fund. This implies that funding will continue to come from existing sources, such as the bursary fund, which was originally intended as a replacement for the Education Maintenance Allowance (EMA) to encourage young people to continue in education. This fund, already far smaller than EMA, would therefore be stretched further to encompass traineeships. The lack of a direct allowance would also involve an extra round of navigating a bureaucratic application process for young people from poorer backgrounds. For all its averred eagerness to make Traineeships as effective as possible in helping young people move into employment, it is a shame that the consultation fails to consider this concern that had previously been raised about its support for more disadvantaged Trainees.

10 Finally, while outcome-driven funding systems can deliver quality and progression, there is a risk that they result in providers being unfairly selective when recruiting people onto their programmes. This is a particular concern in relation to Traineeships, a new programme with a broad target group and an emphasis on giving flexibility to providers. Allowing for this flexibility, and ensuring Traineeships are open to all who could benefit from them, while preventing such selective recruitment, requires a difficult balancing act. The government must ensure that the proposed funding system does not disadvantage young people who providers think may take closer to the full six months to move on to their positive outcomes. External links DfE BIS Traineeships: Funding Reform in England (June 2014) DfE BIS Traineeships Framework for Delivery 2014/15 (May 2014) BIS Skills Funding Statement 2013 to 2016 (February 2014) DfE BIS Traineeships: Framework for Delivery 2013/14 (May 2013) DfE BIS Traineeships: Supporting young people to develop the skills for apprenticeships and other sustainable jobs: A discussion paper (January 2013) DfE webpage on Traineeships Related briefings The Future of Apprenticeships in England: Implementation Plan (November 2013) Traineeships: Framework for Delivery (June 2013) The Future of Apprenticeships in England: Next Steps from the Richard Review: BIS Consultation (April 2013) Review of Vocational Education the Wolf Report (March 2011) For further information, please visit or john.fowler@lgiu.org.uk