1. Apprenticeship Funding Update Head of Funding Data & Calculations
Webinar with
Nick Ayton,
Head of Funding Data & Calculations
Skills Funding Agency
6th December 2016
Gareth Jones
Apprenticeship Strategy Manager
GMLPF
@gmlpfapps

2. Apprenticeship Funding Reform – Latest Update
Welcome
Apprenticeship Funding Update – Nick Ayton, SFA
Questions
Future Webinars

3. Apprenticeships funding from May 2017
Nick Ayton
Head of Funding Data and Calculations
Skills Funding Agency
6 December 2016

4. Content
Funding reforms (apprenticeship levy / co-investment)
Single funding model
Supporting employer ownership of apprenticeships
Supporting the delivery network
The funding system

5. What is the apprenticeship levy and who pays it?
Starts on 6 April 2017, at a rate of 0.5% of pay bill, paid through PAYE
Applies to all UK employers in all sectors
£15,000 allowance is not a cash payment
Only 1.3% of employers will pay the levy
Non-levy employers – co-investment % employer contribution, 90% government contribution.

6. Accessing levy funds to spend on training
Levy funds will be available through a new digital service on gov.uk
First funds appear in account in late May 2017
How funds in the account will be calculated
If 100% of pay bill is in England
100% of levy payment in digital account
If 80% of pay bill is in England
80% of levy payment in digital account
10% government top up to monthly funds entering an account

7. What can funds be used for?
Digital funds and government funding can be used for:
Digital funds and government funding can not 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
wages
travel and subsistence costs
managerial costs
traineeships
work placement programmes
the costs of setting up an apprenticeship programme

8. Key changes since August
In August, we published our proposals for apprenticeship funding. Since then, we have been listening to employers, training providers and other stakeholders to help us develop our final position. The adjustments we have made will help ensure that the reforms benefit more employers and apprentices.
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

9. Single funding model (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 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 digital funds
Employers can negotiate the best price for the training they require. The negotiated price does not include:
VAT
Cost of English, maths, learning support
Additional payments
Employers can spend more than the funding band limit using their own money (not the levy)
Funding bands do not have a lower limit

10. Additional support Disadvantaged young people 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, Health and Care (EHC) plan.
Small Employers
Employers with fewer than 50 employees will have 100% of the training and assessment costs covered up to the band maximum when training a year old (or year old formerly in care or has an EHC 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).

11. Transitional support for frameworks
Training providers will receive additional transitional support for delivering apprenticeship frameworks through:
16-18 uplift
20% of funding band maximum
Also applies to year olds formerly in care or have Education and Health Care plan
Areas of disadvantage
An additional £600 for training an apprentice from top 10% of deprived areas, £300 for next 10% range and £200 for the next 7% range

12. Policy clarification Cross-border funding
Applying a single test for funding through the English system: based on whether the apprentice’s main place of employment is England.
‘Workplace’ is where the apprentice is expected to spend the majority of their time during their apprenticeship.
Prior qualifications
Now and in the future, you can train any individual to undertake an apprenticeship at a higher level than a qualification they already hold.
From May 2017, an individual can be funded to undertake an apprenticeship at the same or lower level to acquire substantive new skills
Transferring funding
During 2018 we will introduce means for employers to transfer up to 10% of the levy funds to another employer with a digital account, or to an ATA.
New employer steering group to design this system so that it meets their needs

13. Different relationships
Impact – funding and programme changes
Impact
Employers
Providers
What is available
Benefits
Different relationships
Get involved
Access levy
Funding rules
Funding system

14. Supporting employers Apprenticeships National Apprenticeship Service
Employer account management team
Telephone support line for small employers
Estimate my apprenticeship funding tool
Find apprenticeship training
Search for apprenticeships
Course directory

15. How funding is earned from May 2017

16. Co-investment example
The negotiated price is £16,000 and the funding band maximum is £15,000
The employer is responsible for paying the £1,000 above the limit directly to the provider. If it is a levy paying employer, this cannot be funded from their digital account.
This leaves £15,000 to be funded as follows:
If a levy paying employer had £20,000 in their digital account, then the remaining £15,000 will be funded directly from their digital account
If it is a non-levy paying employer, the government will pay for 90% of the £15,000 which is £13,500; the employer will need to pay £1,500
If a levy paying employer had £10,000 in their digital account, then £10,000 would be paid from their digital account and the remaining £5,000 will be co-invested; £4,500 from government and £500 from the employer

17. Funding element for the new model
There are 3 main elements in the new funding model:
Completion element - 20% of the lower of either the funding band maximum or the negotiated price is withheld for completion.
Monthly instalments - the remaining 80% is split over the duration of the apprenticeship
Additional payments – additional funding earned at particular times in the apprenticeship

18. Monthly instalments and completion
Total negotiated price = £16,000, but the band limit is £15,000
20% is held back for completion = £3,000 (20% of £15,000)
Apprentice starts 15 August 2017 and planned to finish on 23 August 2019, covering 24 census dates
£12,000 over 24 months = £500 per month planned instalments
Employer directly pays the provider the £1,000 above the band maximum
Aug 17
Sep 17
...
Jun 19
Jul 19
Aug 19
Planned instalments
£500
Expected completion
£3,000

19. Additional payments for the young and disadvantaged
There are additional payments for apprentices who are:
aged 16 to 18 years old when they start
aged who left care or have a local authority EHC plan
For these learners we will pay the following amounts:
For frameworks only (to manage transition to standards), providers will also earn 20% of the funding band maximum. This amount will be spread over monthly instalments and completion in the same pattern as earnings from the negotiated price
Per apprentice
at 90 days
at 365 days
Total
to employer
£500
£1,000
to provider

20. Additional payments for disadvantaged areas
There are additional payments for providers for apprentices who are from areas of deprivation, and start an apprenticeship framework. These are transitional payment for one year only.
We use the Index of Multiple Deprivation (IMD) from 2015, with the apprentice’s Postcode Prior to enrolment.
Additional payments per apprentice on a framework
at 90 days
at 365 days
Total
apprentices from 10% most deprived areas
£300
£600
apprentices from 11-20% most deprived areas
£150
apprentices from 21-27% most deprived areas
£100
£200

21. English, maths and learning support
English and maths up to level 2
Where an apprenticeship requires the apprentice to study English or maths up to level 2, the government will fully fund eligible English and maths qualifications at a rate of £471. This is the same value as in the current Trailblazer pilot.
Learning support
Earned at £150 per month as in current system. If there is evidenced need providers can earn additional funding. This is the same method and values used in the current funding systems.
How they are funded
The cost of English and maths, and learning support, are not included in the total price negotiated between the employer and provider
These costs are fully funded, and not co-invested or taken out of digital accounts

22. Data matching Employer The data items to be matched:
digital apprenticeship service
Apprentice 1 Provider A
The data items to be matched:
Learner ID: Unique Learner Number
Provider ID
Total price
When the apprenticeship started
Apprenticeship ID
The employer will need to authorise the apprenticeship for us to use the funds from their digital account to pay the provider

23. Digital accounts (1 of 3)
HMRC will calculate the proportion of each employer’s pay bill paid to employees living in England; this will be calculated quarterly.
Employers can update their employee’s address data on HMRC’s database by adding their home postcode to their tax return for three consecutive months.
We will assume that all employees are based in England when a PAYE scheme is created, until the next quarterly calculation date.
We will apply a 10% top up to monthly funds entering a digital account. For example, if a levy payment of £1,000 was added to the digital account, we would top this up with £100.

24. Digital accounts (2 of 3)
Funds will expire 24 months after they enter an employer’s digital account; this also applies to top-ups.
The account will work on a first-in, first-out basis, through either payment or expiry. Whenever a payment is taken from an employer's digital account it will automatically use the funds that entered the account first.
Adjustments will be applied to the month that we receive the adjustment:
We will offset negative adjustments against the earliest remaining funds paid into the digital account.
Positive adjustments will expire in 24 months of being paid into an employer’s account if they are unused.

25. Employer contribution
Digital accounts (3 of 3)
Each apprenticeship will be automatically allocated a priority order in the digital apprenticeship service.
This priority order will be used to identify which apprenticeships are funded first from funds in an employer’s digital account.
Example
An employer has a digital account balance of £800. They have two apprenticeships that have each earned £500 this month, so £1,000 in total. .
Digital account
Co-investment
Priority order
Start balance
Payment
End balance
Outstanding earnings
Government
contribution
Employer contribution
Apprenticeship 1 1
£800
£500
£300 £0
Apprenticeship 2 2
£200
£180
£20

26. Published guidance Funding rules Apprenticeship funding from May 2017
Apprenticeship funding: how it will work
Apprenticeship funding: rules and guidance for levy-paying employers
Apprenticeship funding: draft rules for training providers
Apprenticeship funding: draft rules for employer providers
Technical guidance
Apprenticeship technical funding guide

27. Questions?

28. Future Webinars? Possible Subjects for future webinars?? Audit
Funding Reforms
Apprenticeship Standards
End Point Assessment
Employer Engagement
Marketing & use of social media
LEP Priority Sectors overview

29. Apprenticeship Standards
Next webinar
7th February – 10.30am
Apprenticeship Standards
Gareth Jones