Apprenticeship and Funding Reform An overview Teresa Frith June 2016
Content Main aims Detail Key implications
What are the main aims of the Reforms? The Government s message Employer driven Quality Simplicity The aims of the reforms in reality? Increase productivity Achieve the target! Reduce public funding Reduce government responsibility
ACTION / POLICIES ESSENTIAL PRECONDITIONS END STABILISE SIMPLIFY SUSTAIN A pattern of effective An employer colleges responding led skills to (local) economic need with a dual mandate system that is market-driven A D E Q U A T E F U N D I N G All young people to have employability skills including English & maths The creation of 3 million high quality apprenticeships A rejuvenated higher technical & professional education system An end to intergenerational unemployment A more productive economy with higher wages and greater individual prosperity WORKING WITH A GOVERNMENT AGENDA
Key Implications Less direct funding A more commercial approach Priority shift to employers Success measured by progression? 3 million target! Less government influence
The detail
The Detail as we know it Government s 2020 vision Key changes from SASE Current position Funding reforms, including Levy Apprenticeship governance
Government s 2020 vision 3 million! Quality and recognition of Apprenticeships Funding Public Sector (statutory 2.3% of workforce) Small Businesses (remove barriers to allow growth) Larger Employers (increase investment) Marketing and communications Careers advice and guidance Provider Readiness System Governance Higher and Degree
Frameworks to Standards? Standards designed by employers will replace existing Frameworks, target date 2017/18 (for majority, the rest by 2020). New standards are clear and concise, written by employers and no more than a few pages long and define a job in a skilled occupation. All Apprenticeships will last a minimum of 12 months and will include a minimum of 20% off the job training and English and maths. They cover skills, knowledge and behaviours. All Apprenticeship standards have an independent endpoint assessment. Apprenticeships will be graded for the first time. The route to competence is more flexible, employers and college free to design delivery programme.
What will it look like? Employer and college agree to work together Apprenticeship standard to be followed selected Apprentice selected Employer and college agree on delivery plan and overall price of training and independent assessment Employer and apprentice sign Apprenticeship Agreement Employer, apprentice and college sign Statement of Commitment Employer and government pay the agreed amount and training commences Independent assessment is undertaken Process complete
So where are we now? (June 2016) Trailblazer employer groups: approx. 180 Standards published: 237 ) Standards in preparation: 146 ) 383 108 Standards approved for delivery Of those approved for delivery (June 2016) L2 L3 L4 L5 L6 L7 22 44 20 5 14 3 No standard approach to Standards! L6 and L7 defined as degree apprenticeships
The funding
Key Features of Transition Funding Co-investment for training and assessment no fixed price 2 from government for every 1 that an employer invests in delivery and assessment, up to a pre set cap English and maths (Level 1 & 2) will be fully funded and additional learning support is available as needed. Employer Incentive Payments during the first year: for 16-18 year old - 50% at 3 months and 50% at 12 months For small businesses 100% at 3 months For completion - at the end of the Apprenticeship Incentives can be used as each employer choses
2016/17 Funding Model for Standards Maximum Core Government contribution ( 2 for every 1 from employer) Employer contribution if the maximum cap is claimed Additional incentive payments Recruiting a 16-18 year old For a small business (<50) For successful completion Maximum total Government contribution Cap 1 Cap 2 Cap 3 Cap 4 Cap 5 2,000 3,000 6,000 8,000 18,000 1000 1,500 3,000 4,000 9,000 600 900 1,800 2,400 5,400 500 500 900 1,200 2,700 500 500 900 1,200 2,700 3,600 4,900 9,600 12,800 28,800
Transition Funding example Assumes small employer (under 50 staff), 16 18yr old apprentice) Employer and college select apprenticeship standard and agree the total cost of delivery and assessment will be 3,500*. The standard is CAP 1. Government s delivery contribution = 2,000 (paid to college) Government s incentive contributions = 1,600 (paid to employer) Total employer contribution = 1,500 (paid to college) This equates to a net gain to the employer of 100. Assuming that the apprentice is successful. The employer will still be responsible for employing and paying the apprentice * (plus the cost of English and maths delivery and any additional support the apprentice might need)
What we know we don t know in funding For non-levy paying employers, what the ratio will be between the large state investment and small employer contribution? What incentives (if any) will be available to levy paying employers for 16-18yr olds and successful completion? What incentives (if any) will be available to non-levy paying employers for 16-18 yr olds, smaller organisations and successful completion? Any detail as to the precise process to access funding for non-levy paying employers
Government Training Provider Non-levy paying employer Levy paying employer How the Levy will work 10% Top up HMRC collect levy (PAYE) Employer views funds in digital account to spend in England Employs Apprentice. Commits to training Receives training for apprentice SFA draws down levy funds monthly Unused levy funds expire after 18 months Employs Apprentice. Commits to training Receives training for apprentice Employer pays for proportion of cost direct to training provider SFA pays proportion to the training provider Registers with SFA Offers apprenticeship training Provides training to apprentice Provides info via ILR to SFA that training has taken place & that employer has made contribution Paid by SFA and balance by employer 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
Employer (levy) commitment and contracting TRIGGER: The digital apprenticeship service is launched 1.1 Employer registration 1.2 Search and Select 1.3 Commit levy funds 1.4 Agree contracts OUTPUT: Levy commitment is recorded in the digital apprenticeship service and appropriate contracts are in place. Start Outcome 6April 2017 - HMRC begins collecting the apprenticeship levy from employers who contribute. Digital Apprenticeship Service goes live. DAS registration will verify the identity of an employer. The employer registers to create a digital apprenticeship service account. The employer verifies & links PAYE scheme(s) to their account. The employer can view their levy account balance. The SFA maintains a library of apprenticeship standards and a catalogue of providers course offerings to help employers search and select the right standard and provider. The SFA provides a recruit an apprenticeship service for employers. The employer and provider agree a price and the employer records the details of the deal in the digital apprenticeship service initiating the double-lock which will be confirmed by the provider via ILR returns. The SFA issues an ancillary agreement to the selected provider, with a schedule to cover the value of the deal, or update the existing agreement if this is not the first deal. The provider can begin delivering the apprenticeship. The SFA is able to manage the apprenticeship budget by monitoring and forecasting levy commitment.
Employer (non-levy) Process Agency procures nonlevy provision A contract is agreed with providers Employer and provider agree deal Provider submits ILR Employer pays contribution Agency pays funding The SFA invite and select those providers on the Register of Training Organisations to tender to deliver cofunded apprenticeship education and skills training. A contract for services between the SFA and the provider to deliver non-levy funded apprenticeship education and skills training is agreed. A non-levied employer agrees a deal with an Agency-approved provider to deliver apprenticeship education and skills training. The Agency monitors the performance of a provider delivering non-levy funded apprenticeship education and skills training through monthly ILR submissions. The employer pays the agreed contribution. The Agency calculates the funding due to the provider and payment is made.
Delivery and achievement Trigger: Apprenticeship Start 3.1 Provider submits ILR 3.2 Double Lock 1.3 Calculate funding& payment 1.4 Achievement Payment. End point assessment if required OUTPUT: Apprenticeship certification completed Start Outcome A training provider from the list of preapproved training providers has an ancillary agreement in place to provide training to a levied employer. Providers submit on a monthly basis an ILR containing: Start Date Employer Apprentice Details LARS code Agreed price SFA checks that the details in the ILR match with the details in Digital Apprenticeship Service The SFA will calculate the funding earnt by the provider. SFA pays from levy at full value SFA pay any outstanding balance at cofunded rate The provider will submit evidence of completion to the SFA. The SFA are able to track government funding being used to pay providers for apprenticeship training.
Operating model what can happen? Expiry of levy funds Levy funds will expire 18 months after they enter your account unless you spend them on apprenticeship training. This will also apply to any top-ups in your account. Levy funds which have expired will keep their value, as they will be reallocated to committed employers through the top-up to their accounts. Directing levy funds to other employers In the first year of the levy, you will be able to use the funds in your levy account to pay for apprenticeship training and assessment for your own employees. We know that some employers might wish to direct their funding to other employers. We will make an assessment of the pros and cons of any approach, including the trade-offs with other design choices, before providing further information in June Pooling funds in a levy account with other employers If you are in a group of companies connected for the purposes of paying the levy, your group will be able to collect their funds together into one account. Employers that are not connected will not be able to pool funds in a levy account using the digital service. However, you will be free to co-ordinate your spending at local or sector level outside of the digital service.
Co-Investment: Non-levy paying employers CO-INVESTMENT There are two types of employers who will be required to contribute outside the levy towards the cost of their apprenticeships training 1. Employers who haven t paid into the levy 2. Employers who have used all funds in their digital apprenticeship account These employers will be required to co-invest a small proportion of funding towards the cost of their apprenticeships training. We are committed to providing financial government support to these employers to pay for their apprenticeships training. We will therefore contribute a large proportion of government funding to cover the majority of the costs of apprenticeships training. DIGITAL APPRENTICESHIP SERVICE ACCESS If you do not pay the levy you will not need to set up a digital apprenticeship service account to pay the training provider in April 2017. You will agree a price and pay your contribution towards the costs of the training and assessment to the training provider directly. This will give you more time to prepare for the new system.
Why do we have funding limits? What is a funding band? Funding bands set the ranges in which government expects the cost of training an assessment for apprenticeships to fall. Each of the bands will set an upper limit to which government or levy funding can be used to pay for the apprentice s training. For example: Butcher Apprenticeships Standard Band 3 Employers will not be able to spend an unlimited amount of money on a single apprentice. Funding bands will be set which limit the amount of levy funds an employer can spend on training for an individual apprentice. The band will vary according to the level and type of apprenticeship (for example, more expensive, higher quality training is likely to be in a band with a higher limit). We want to ensure that apprenticeships represent the best quality and value for money to the employer. Setting limits to the amount of government or levy funding that can be used for apprenticeships will enable employers to increase the quantity of apprenticeships they can purchase with their funding, whilst ensuring that quality training does not become too expensive for employers to purchase. Employers can negotiate the best price for the training they require directly with training providers. We would encourage employers to seek the best price for the training they are purchasing. Much like all business investment decisions, employers should be empowered to get a quality service for an acceptable price. If employers want to spend more than the funding limit themselves then they will be free to do that. 3,000 to 6,000
Example of Levy calculation Levy set at 0.5% of paybill (total employee earnings, not benefits in kind) with an allowance of 15,000 Employer with 500 employees each with a gross salary of 20,000 Paybill: 500 x 20,000 = 10,000,000 Levy sum: 0.5% x 10,000,000 = 50,000 Allowance: 50,000-15,000 = 35,000 annual levy payment
Funding limits how they work WITHIN THE FUNDING BAND LIMIT Example funding band limit = 6,000 Price you negotiate with your training provider = 5,000 The cost is within the funding band limit OVER THE FUNDING BAND LIMIT Example funding band limit = 6,000 Price you negotiate with your training provider = 7,500 The cost is above the funding band limit Levy payers Non-levy payers* Levy payers Non-levy payers* 5,000 will be deducted from your levy account over the life of the apprenticeship. You will be required to contribute a small proportion of the 5,000 cost. 6,000 will be deducted from your levy account over the life of the apprenticeship. You will be required to contribute a small proportion of the 6,000 cost, and The level will be announced in June. You will be responsible for paying 1,500. This payment can t be made from your digital account You will be responsible for paying 1,500. * Employers who have not contributed to the levy, or who have used all the funding in their accounts 25
What can levy funds be used for? apprenticeship training and assessment (with an approved training provider and assessment organisation up to its funding band maximum) FUNDS CANNOT BE USED FOR: wages statutory licences to practise travel and subsidiary costs managerial costs traineeships work placement programmes the costs of setting up an apprenticeship programme Apprentices who have been accepted on to an apprenticeship before April 2017 will be funded for the full duration of the apprenticeship under the conditions that were in place at the time their apprenticeship started. If you pay the levy you will not be able to use the funds in your levy account to pay for these apprenticeships.
Apprenticeship Governance An Institute for Apprenticeships to be established by April 2017 (shadow version in 2016) Independent of Government Wider quality assurance function across standards Assuming functions currently undertaken by BIS/SFA: Approve/reject expressions of interest for new standards Provide guidance on the development of standards/assessment Approve/reject standards/assessment plans, inc expert/peer review Maintain an overall picture across all sectors Determine policy on standard refresh or closure Advise government on funding allocation to each standard
ECO-SYSTEM 07/07/2016 28
STAKEHOLDER MAPPING 07/07/2016 29
Next Steps SUMMER 2016 AUTUMN 2016 BY END 2016 APRIL 2017 High level scope Operating detail Transition Operation BIS/DfE publish provisional funding rates for different elements of the new funding regime in June BIS/DfE publish confirmed funding rates for April 2017 SFA publish provisional funding rules SFA publish confirmed funding rules Full set of confirmed funding guidelines published Digital apprenticeship service registration opens Apprenticeship Levy operational digital apprenticeship service operational New funding model live Institute for Apprenticeships in place 30
The Digital Apprenticeship Service
Digital apprenticeship service screenshots
Digital apprenticeship service screenshots
Digital apprenticeship service screenshots
Data collection To populate SFA s apprenticeship training provider search they need information from you about: You as a provider Your training locations / areas The apprenticeships you offer
Data collection points to consider Do you have apprenticeship information for employers? What information do you think is important to employers? Who will be responsible for your Find apprenticeship training information and keeping it up to date?
Developing the service: call to action SFA are asking that providers: prepare information about your apprenticeship offer ready for data entry in the summer work with your employers so that they understand the funding guidance Get involved by emailing: DASproviderpilot@sfa.bis.gov.uk
The implications
Key Implications Less direct funding A more commercial approach Priority shift to employers Success measured by progression? 3 million target! Less government influence
The Future of FE?
Potential shifts in behaviour - employers Get rid of existing staff to allow for apprentices? Look to spend levy on existing employees Look to replace apprentices annually Look for a mix of in-work progression and new recruits at a range of levels Ignore the tax and carry on
Potential shifts in behaviour - colleges Response to being levy payers? Specialist sectors? Relationships with other providers? Commercial nature? Range of provision in apprenticeship? Range of provision other than apprenticeship?
Key college considerations College culture and ethos? Appropriate apprenticeship vehicle? Staffing structures (including governance)? Estate? Commerciality and sustainability? LMI employers and competitors? Alignment of classroom based offer? Employer influence on whole college offer? Effective communications to all stakeholders Level of investment against potential return?
Centralised v distributed in curriculum areas Clear costing model to support financial planning Mapping current provision to new standards Mapping standards to economic needs End point assessment Quality monitoring Delivery model Employer Engagement Large employer/sme relationship strategy Sales strategy aligned to incentives CRM Stakeholder engagement Market need assessment, inc LMI Learner Progression Staff & Resources World of school/college to word of work Entry points Employability/routes to apprenticeship HE opportunities Skills mapping of staff CPD Assessor role Estates and capacity based on delivery models Use of technology
Apprenticeship Reforms Update Guidance for developers of standards, Dec 15: Published standards and those in development: https://www.gov.uk/government/collections/apprenticeship-standards https://www.gov.uk/government/publications/future-of-apprenticeships-inengland-guidance-for-trailblazers https://www.gov.uk/government/publications/apprenticeship-standards-indevelopment List of standards and stage of development: https://www.gov.uk/government/publications/apprenticeship-standards-list-ofoccupations-available Have your say on draft EOIs, standards and assessment plans, via the monthly online survey: https://www.gov.uk/government/publications/apprenticeship-standardschanges-to-the-process-for-approvals
Apprenticeship Reforms Update Funding rules: https://www.gov.uk/guidance/sfa-funding-rules Levy guidance: https://www.gov.uk/government/publications/apprenticeshiplevy-how-it-will-work/apprenticeship-levy-how-it-will-work Degree Apprenticeship Fund: https://www.gov.uk/government/news/sajid-javid-inmanchester-to-announce-multi-million-pound-boost-todegree-apprenticeship-opportunities
Questions?