1. Apprenticeship Reform

2. 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

3. 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.

4. Apprenticeships: a brief history (2)
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.

5. 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

6. 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)

7. 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. “

8. 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

9. 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

10. 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

11. 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

12. 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.

13. 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

14. 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.

15. 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.

16. Funding limits– how they work
WITHIN THE FUNDING BAND LIMIT
OVER THE FUNDING BAND LIMIT
Funding limits– how they work
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
£5,000 will be deducted from digital account over the life of the apprenticeship.
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%.
£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
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

17. 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

18. 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

19. 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.

20. 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

21. 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

22. 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 year old apprentice
Disadvantaged young people
Government will pay £1,000 to employers, and a further £1,000 to training providers if they train 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 year old (or 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)

23. 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 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 year olds on a framework. Also applies to 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

24. 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

25. 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

26. ? ? ? ? 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 ? ? ? ?

27. ? ? ? 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 ? ? ?

28. 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 ? ? ?

29. 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 ? ? ? ? ?

30. 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 ? ? ? ?

31. 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 ? ? ?

32. 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

33. 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

34. 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

35. 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

36. 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.

37. Looking ahead: Reforming the reforms?

38. 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 year olds (November 2016)

39. 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)