Trailblazer Day Jane Thompson Director of Apprenticeships and Commercial Development Introduce Business benefits of taking on an apprentice and some facts and figures I hope you will be interested in

The Plan Update on reforms Pricing template Challenge 3pm Feedback I thought it would be useful to tackle some myths as apprentices have been around for a long time and the word is used in a number of contexts Ours is early 30s and we have just placed a 37 year old dinner lady who is retraining as an accountancy apprentice working for a small food wholesaler and distributor, competition is fierce and you are interviewing them, quite often the older candidates have a lot more to offer the traditional model is day release and in the creative industries that is our plan but some such as business admin don’t need to attend college and we can be very flexible with delivery models depending on numbers, we had 10 start at the council this week and they are spending 2 weeks up front at college, apprentices at UKAR are going to do one day release every other week There are over 350 frameworks and we deliver 40, from catering to customer service, barbering to business admin, painting and decorating to pharmacy and Jane will talk through the range within this sector. Don’t deny it is a cost effective method of recruiting staff, Apprentices are paid a minimum of £2.73 per hour if in their first year of app or under 19 but it goes up to £3.30 in October, £115 if 35 hour week, but they are gaining invaluable work experience, qualifications that are fully funded by the government and which often they would have had to pay for The qualifications which are within an apprenticeship framework are valid, rigorous qualification often the same as those who study full time, app are level 2 -4, we have a number of higher apprentice studying 4/5 and degree apprentices are coming soon. Must employ after – no, most that we work with fixed and then review – 92% but

Apprenticeship Reform

Apprenticeship Reform: Presentation contents Prelude: Apprenticeships – a brief history The role of Government & party politics The 3 million Apprenticeship starts target The Apprenticeship Reform programme: Apprenticeship Standards and funding bands The Apprenticeship Levy and other public funding for Apprenticeships What can the Levy and other public funds be used for? Employers purchasing Apprenticeships Additional support: Proposed in August Changes announced since August How the new funding system will work overall

Apprenticeships: a brief history The Statute of Artificers, introduced by the parliament of Elizabeth 1st in 1563, made it illegal for anyone to “exercise any art, mystery or occupation now used or occupied within the realm of England and Wales except he shall have been brought up therein seven years at the least as an apprentice”. An apprentice, often starting as young as 10 or 12, would learn his trade over a period of years — often seven, but it could be longer or shorter than this — with his master being responsible for his board, lodging and clothing as well as teaching.

Apprenticeships: a brief history Apprenticeships in certain trades, particularly those which required practical skills, remained popular in subsequent centuries. There were around 340,000 apprentices per year in the early twentieth century, according to an Institute of Directors (IoD) policy paper from 2003. By the mid-1960s — “the high water mark for apprenticeship in Britain” according to the IoD — roughly 35 per cent of male school leavers aged 15 to 17 went on to do an apprenticeship. However, by 1990 the number of apprentices had dropped to just 53,000.

Apprenticeships today The term “Apprenticeship” is not currently legally protected however to attract public funding an Apprenticeship must as a minimum, comply with certain basic criteria: An Apprenticeship is a job with structured and accredited on & off the job training & assessment To be an Apprentice the individual must be in work already : an Apprenticeship is not preparation for employment For an Apprenticeship to exist there must be a fully engaged employer, working in partnership with an organisation (eg. College) accredited to deliver the relevant training So unless it acts as the employer – or mandates other employers to take on Apprentices – no Government can “create” Apprenticeships

Apprenticeships: The role of Government Unless it acts as the employer – or mandates other employers to take on Apprentices – no Government can “create” Apprenticeships However Governments can: Legislate and regulate to create an environment in which employers will be more likely to engage in Apprenticeships (eg. abolish NI contributions, agree a lower NMW for Apprentices) Use fiscal policy – tax and spend – to subsidise or fully fund the cost of Apprenticeships from the perspective of the employer and individual Apprentice Use information to influence the views – and thus behaviour - of employers and individuals (eg. young people, their parents)

Apprenticeships and party politics 1 “ For too long we have failed to provide a system which makes the best use of the talents of young people. So we will guarantee every school leaver that gets the grades an apprenticeship. We will create thousands more apprenticeships in the public sector, including the civil service. Every firm getting a major government contract, and every large employer hiring skilled workers from outside the EU, will be required to offer apprenticeships. “ “We will give employers more control over apprenticeships funding and standards. In return, we will ask them to increase the number of high quality apprenticeships in their sectors and supply chains. We will also give them the powers to deal with any free-riding employers who do not train. “

Apprenticeships and party politics 2 “ ….. apprenticeships will be gold-standard qualifications. We will re-focus existing spending away from low-level apprenticeships for older people, and towards a system where apprenticeships are focused on new job entrants, lasting at least two years, and providing level three qualifications or above.” “We will make sure that apprenticeships can lead to higher level qualifications by creating new Technical Degrees and supporting part-time study. They will be co-funded, co-designed and co-delivered by employers and they will be the priority for expansion within our university system. “ Labour Party Manifesto 2015

Apprenticeships and party politics 3 “We have already delivered 2 million new apprenticeships over the last five years. Over the next five years, we will deliver three million more and ensure they deliver the skills employers need” Conservative Party Manifesto 2015

The 3 million Apprenticeship target The target: 3m Apprenticeship starts during this Parliament Policy objectives Tackling youth unemployment Improving productivity Providing good value for public money Giving employers more control Simplifying the Apprenticeship system Increasing quality

The 3 million Apprenticeship target …for the purpose of which Apprenticeships will encompass: All ages (16+) All levels up to Level 7/Degree Apprenticeships All occupations and sectors (Public, private, voluntary) But the Apprentice must work at least 30 hours per week, must be paid at least the NMW for Apprentices and the Apprenticeship must last at least 12 months In order to achieve the 3 million target the Government has embarked upon an ambitious programme of reform This includes a new hypothecated tax: The Apprenticeship Levy

An overview of the Apprenticeship reform programme… Individual apprenticeships provide good returns, but there is an insufficient number of apprenticeship opportunities to meet demand from individuals, and skills gaps remain in the economy. Whilst the vast majority of apprenticeships provide high quality training, feedback from employers shows that this is not always the case. We need to continue to drive up the quality of apprenticeship training and ensure that anyone completing an apprenticeship is fully competent in their occupation. Ambitious Government reforms: Employers at the heart of designing new Apprenticeships Standards to replace apprenticeship frameworks by 2020. New Institute for Apprenticeships led by employers to oversee standards and ensure quality and rigour Apprenticeships given equal legal protection to degrees Apprenticeship target for public sector bodies – duty for 2.3% of workforce to be apprentices will grow opportunities Secondary Class 1 NICs abolished for apprentices under the age of 25 since April 2016 All underpinned by changes to how apprenticeships are paid for. New apprenticeship levy paid by 2% of employers will fund expansion. Digital Apprenticeship Service will enable employers to directly manage their apprenticeship programmes and purchase training.

Apprenticeship Standards: What are they? Employers are designing apprenticeship standards to meet the needs of their industry through the Trailblazer programme. In time these will replace the current suite of Apprenticeship “Frameworks” A standard should: be short, concise and clear set out the full competence needed in an occupation in terms of Knowledge, Skills and Behaviour (KSBs) have the support of employers including smaller businesses be sufficiently stretching to require at least a year of sustained and substantial training to meet align with professional registration where it exists contain minimum English and maths requirements and only include mandatory qualifications under certain circumstances. be subject to independent assessment by an “End point assessment” organisation

End Point Assessment As well as containing on programme training and assessment, all apprenticeship standards must contain an end-point assessment. An independent organisation must be involved in the end-point assessment of each apprentice so that all apprentices following the same standard are assessed consistently.  The Register of Apprentice Assessment Organisations is a list of organisations that have been assessed as being suitable to conduct independent end-point assessment of apprentices and be in receipt of public funds. Only these organisations are eligible to conduct independent end-point assessment of apprentices. Although a number of different people and organisations may be involved in an apprentice’s end-point assessment, only the independent organisation needs to apply to and be listed on the register. Employers of apprentices will select an organisation from the register to conduct independent end-point assessment of their apprentices. The register is regularly updated as more organisations successfully apply.

Funding bands Number Band limit 1 £1,500 2 £2,000 3 £2,500 4 £3,000 5 £3,500 6 £4,000 7 £5,000 8 £6,000 9 £9,000 10 £12,000 11 £15,000 12 £18,000 13 £21,000 14 £24,000 15 £27,000 Every apprenticeship Standard (and Framework in the interim) will be placed in a funding band The upper limit of each funding band will cap the maximum: amount of digital funds an employer who pays the levy can use towards an individual apprenticeship. that government will ‘co-invest’ towards, where an employer does not pay the levy or has insufficient funds in their digital account Employers can negotiate the best price for the training they require If employers want to spend more than the funding band limit, using their own money, then they will be free to do that. Funding bands do not have a lower limit.

WITHIN THE FUNDING BAND LIMIT OVER THE FUNDING BAND LIMIT Example funding band limit = £6,000 Price employer negotiates with training provider = £5,000 The cost is within the funding band limit Example funding band limit = £6,000 Price employer negotiates with training provider = £7,500 The cost is above the funding band limit With enough funding in employer account Without enough funding in account With enough funding in employer account Without enough funding in account If employer has £0 in your account Government will pay 90% (£4,500) and employer will need to pay 10% (£500). If employer has digital funds available, these will be used first, and then Government will pay 90% of the remaining costs, and you will pay 10%. If employer has £0 in account Government will pay 90% (£5,400) and employer will need to pay 10% (£600). This is the maximum payable within the limit of the band. Employer will also be responsible for paying the additional £1,500. This payment can’t be made from the digital account £5,000 will be deducted from digital account over the life of the apprenticeship. £6,000 will be deducted from digital account over the life of the apprenticeship. Employer will be responsible for paying £1,500. This payment can’t be made from the digital (ie. Levy) account

What is the Apprenticeship levy and who will pay it? Levy on UK employers will fund growth in the apprenticeship programme. In parallel, employers will be given more influence over how apprenticeships are designed and paid for, so that they focus on the skills, knowledge and behaviours that are required of the workforce of the future. Growth in apprenticeships will open up opportunities to individuals from all backgrounds and all parts of the country, giving more people the chance to pursue a successful career. The levy will come into effect on 6 April 2016, at a rate of 0.5% of pay bill, paid through PAYE. It applies to all employers in all sectors. All employers have an allowance of £15,000 to offset against their levy liability. The levy allowance is not a cash payment and cannot be used to purchase apprenticeship training The allowance means that only UK employers with an annual pay bill of more than £3 million Are liable to pay the levy. That’s 2% of employers. Employers in England who pay the levy will be able to get out more than they pay into the levy, through a 10% top-up to their digital accounts

Paying the levy LEVIED EMPLOYER NON-LEVIED EMPLOYER How? Employers will calculate, report and pay their levy to HMRC, through the Pay As You Earn (PAYE) process alongside income tax and National Insurance. Single employers with multiple PAYE schemes will only have one allowance. Connected employers - we intend to allow employers to share one allowance between employers which are in connected ownership or control. Employers will not be exempt from the apprenticeship levy if they already pay into an existing levy. LEVIED EMPLOYER NON-LEVIED EMPLOYER Employer of 250 employees, each with a gross salary of £20,000. Pay bill: 250 x £20,000 = £5,000,000 Levy sum: 0.5% x £5,000,000 = £25,000 Allowance: £25,000 - £15,000 = £10,000 annual levy payment 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 £2,000,000 = £10,000 Allowance: £10,000 - £15,000 = £0 annual levy payment

Other public funding for Apprenticeships There are two types of employers who will be benefit from other public funding (ie. other than Levy funds they themselves have contributed) 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 pays 90% of the costs of training and assessment. The employer will be responsible for paying 10% of the costs.

What can Levy & other public funding be used for? Levy funds and other government funding for Apprenticeships can be used for: apprenticeship training and assessment against an approved framework or standard with an approved training provider and assessment organisation up to the funding band maximum for that apprenticeship However it can not be used for: wages travel and subsistence costs managerial costs traineeships work placement programmes the costs of setting up an apprenticeship programme

Employers purchasing Apprenticeships 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 Levied employers buying Apprenticeships 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 Government/SFA will hold back 20% of the total cost, to be paid on completion of the apprenticeship. Non-levied employers buying Apprenticeships from May 2017 Pay their cash contribution (10%) direct to providers Move onto the digital system at a later date

Additional support : proposals published in August 2016 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 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 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)

Changes announced since August In August, Government published its proposals for apprenticeship funding. Since then a number of changes have been announced – key ones summarised below Proposals in August Final funding policy Expiration 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

How the new funding system will work overall Government Training Provider Paid by SFA and balance by employer HMRC collect levy (PAYE) Employs apprentice and commits to training Provides training to apprentice Timely data on training Employer views funds in digital account to spend in England Check training is complete If funding unlocked: pay provider Registers with SFA Employer and Provider Identity Assurance Pass data on levy payments from HMRC to DfE Unused funds expire after 24 months Receives training for apprentice Payments to providers taken from digital account Commits to provide apprenticeship training 10% Top up Levy paying employer Employs apprentice and commits to training Receives training for apprentice Employer pays for proportion of cost direct to training provider SFA pays govt proportion of costs to the training provider Non-levIED employer Provides info via ILR to SFA that training has taken place & that employer has made contribution

Apprenticeship readiness Will you be ready when the apprenticeship reforms commence from May 2017? Organisational strategy Contracts Systems and data Funding rules and compliance Finance Curriculum Marketing

? ? ? ? Organisational strategy You have developed and implemented an organisational strategy for implementing the apprenticeship reforms Staff have a good understanding of the new apprenticeship system and your organisational objectives Learning and development plans have been developed and your organisation has accessed toolkits and support available to the sector You have examined your governance arrangements and considered whether these are fit for purpose ? ? ? ?

? ? ? Funding Rules and compliance The level of knowledge of the funding rules (from 1 May 2017) within your organisation Internal compliance processes have been re-engineered to reflect the new funding system Arrangements for collecting and reporting mandatory employer contributions are in place ? ? ?

Curriculum Your organisation is involved in trailblazer groups (developing new Apprenticeship Standards) or understand how to get involved You have developed a strategy for conversion of all of your frameworks to standards with a clearly defined timetable and have the staffing expertise to deliver standards Your employer engagement strategy includes offering standards where approved for funding ? ? ?

Marketing What percentage of your apprenticeships delivery do you anticipate being through levy paying employers? You have an employer engagement strategy for levy paying employers You have an employer engagement strategy for non-levy paying employers Marketing materials have been designed to reflect the new apprenticeship system Small and medium sized enterprises you work with understand the new co-investment system ? ? ? ? ?

Finance You have assessed the impact of Apprenticeship reforms on your income levels and expected cash flow You have calculated potential funding for individual frameworks and standards based on the published bands and prices you might negotiate with employers You have planned for variations in income as a result of the publication of the new funding bands, including implications around cash flow, investment requirements, VAT and credit control You have developed systems to manage multiple funding systems for apprenticeships from May 2017 ? ? ? ?

Systems and data You have systems which are able to accurately report apprenticeship activity to the SFA through the ILR on a monthly basis Your organisation has submitted its apprenticeship offer to the course directory so it is visible to employers, and knows how this information will be kept up to date Access arrangements for the Digital Apprenticeship Service have been arranged and staff are familiar with its functionality ? ? ?

Contracts You have internal systems developed which will enable you to contract with levy paying employers Existing sub contracting arrangements have been reviewed and refined in line with the funding rules Systems for contracting with the End Point Assessing organisations have been developed ? ? ? And by May 2017: You have been approved for entry on to the Register of Apprenticeship Training Providers…….. …..and secured a maximum earnings value (funding facility) to support non-Levy paying employers

The Register of Apprenticeship Training Providers (RoATP) : Purpose Entry route for organisations that want to deliver apprenticeship training Provide assurance to employers and government Allow employers who wish to deliver training to their own employees to do so Sets a high bar for providers to meet if they want to deliver apprenticeship training

Apply for one route only Application routes There are three application routes to facilitate delivery of apprenticeship training. Any organisation can only apply via one route Main Application Route Employer Provider Route Supporting Route Apply for one route only

RoATP Timeline Publication of RoATP SFA Evaluates Applications Open for Applications March 2017 Nov - Feb 25 October 2016 2016 October November December January February March April May June July 2016 July Today 25 November 2016 May 2017 Close for Applications Delivery can begin March 2017 Launch of RoATP Feedback to Applicants

Procurement to support non-Levy payers Simultaneously to inviting applications to the RoATP the SFA is running a procurement to allocate (distribute/ration) public funding to support employers that will not use a digital account to pay for apprenticeship training. Organisations interested must: apply to the main RoATP application route And complete the invitation to tender for the procurement For those successful, contracts will begin on 01 May 2017 and end on 31 July 2018. RoATP applications and responses to the invitation to tender must be submitted by 5.00pm on 25 November 2016.

Looking ahead: Reforming the reforms?

IPPR recommendations The government should abolish level two apprenticeships for 16–18-year olds and replace them with a pre-apprenticeship programme Pre-apprenticeships should contain more off-the-job training and a final transferable qualification Employers should be subsidised for hiring pre-apprentices – giving them a clear financial incentive to take part in the programme There should be one pre-apprenticeship programme for each of the 15 technical pathways Pre-apprenticeship programmes should only be offered by FE colleges or not-for-profit training providers Pre-apprenticeships should be explicitly designed to help young people move onto a full level three apprenticeship at age 18 or 19 Earning and Learning: Making the Apprenticeship system work for 16-18 year olds (November 2016)

Policy exchange recommendations All newly approved and reapproved standards should have to include evidence that they are focussed on skilled occupations, and a detailed training plan covering content, time allocations, off the job training and qualifications Add a new gateway for Ofqual to inspect all new assessment tools and to accredit all apprenticeship assessment organisations The Institute for Apprenticeships should become the voice of technical education for all post-16 learning Trailblazer groups should be converted into Technical Education Councils, following the pathways set out by the Sainsbury Review Funds from the apprenticeships levy should sit in a separate, dedicated fund, with the institute choosing whether to distribute it on a sectoral basis State funding for technical education should be widened to include higher-level classroom-based qualifications, funded by loans and with a lifetime allocation The skills we need and why we don’t have them: How Apprenticeships should be reformed to make the UK compete on the global Stage (November 2016)

The Challenge Each team needs to plan which standards they will introduce and when – complete the s/sheet For each standard / framework we need a delivery plan to enable pricing For each standard we then need a SoW for the standards

Useful links standards website the funding