Funding reform webinar

Funding reform webinar - 27-10-16
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Agenda Welcome and introduction to apprenticeship funding reforms Nick Linford, author of the Complete Guide to Funding Apprenticeships Levy funding for small and large employers – final details Una Bennett, Funding Mechanism Deputy Director at the SFA Break for refreshments Extended Q&A on the funding reforms Una Bennett, Funding Mechanism Deputy Director at the SFA Break for lunch Using technology to harvest the opportunities from apprentice reforms Fiona Hudson-Kelly, CEO at Smart Assessor Applying to become a registered apprenticeship provider (‘market entry’) Una Bennett, Funding Mechanism Deputy Director at the SFA Modelling the impact of the new levy system Nick Linford 15:30 End

What four? 1. Four years so far 2. Four skills ministers so far
13/04/2016 What four? 1. Four years so far In June 2012 Doug Richard was asked by the government to review apprenticeship content and funding 2. Four skills ministers so far John Hayes Matt Hancock took over Sept 2012 Nick Boles took over July 2014 Robert Halfon Took over July 2016 3. Four consultations so far (no going back) 2013 2014 2015 Closed September 2016 For more training and events visit lsect.com

4. Key changes (no point pretending it’s simple)
13/04/2016 4. Key changes (no point pretending it’s simple) 1. All frameworks to be replaced by standards Key changes: Standards are being designed by employer groups, require an end-point-assessment and often don’t require any qualifications. Frameworks being switched off in phases through to 2019/20. 2. National funding formula replaced by ‘negotiated’ rates Key changes: For apprentice starts from 1 May 2017 the SFA will no longer determine apprentice funding values using listed rates. Instead, providers and employers can negotiate a level of subsidy within one of 15 upper limits (from £1,500 to £27,000). 3. Extra £1bn for apprenticeships via a levy Key changes: From April employers will pay an extra 0.5% of their payroll above £3m into their levy pot. It’s expected this will generate £2.5bn per year for England by 2019/20 and providers will access this pot via a new Digital Apprenticeship System. 4. A 90% subsidy when the employer levy pot is empty Key changes: If an employer has no levy pot (98% of employers) or it runs out, the SFA are paying 90% of the negotiated rate on condition the employer has paid 10% in cash first and that provider has an allocation. In the pilot, running since 2014, the subsidy is 67% if 33% paid first (concern over size of mandatory cash contribution). For more training and events visit lsect.com

What’s the reform really for?
13/04/2016 What’s the reform really for? Reforms intended to be the solution to the problem of a lack of employer demand Employer demand will go up as will ‘be in the driving seat’ and have ‘ownership’ of: > The content & assessment (standards) > The funding (levy, fees and negotiation) > The oversight (Institute for Apprenticeships) But not everyone is convinced an employer owned model is compatible with supporting the young and social justice And not everyone is convinced a 3m starts target is compatible with a commitment to ‘high quality’ For more training and events visit lsect.com

https://findapprenticeshiptraining.sfa.bis.gov.uk/
Did you know?

Apprenticeship Funding
Una Bennett Deputy Director November 2016

What I will cover The apprenticeship levy Use of levy funds
Apprenticeship funding including changes Contracting arrangements Using the digital apprenticeship service

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

Paying the levy Employers pay their levy to HMRC, through the PAYE process Single employers with multiple PAYE schemes will only have one allowance. Connected employers share one allowance 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

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

What about non levy payers? Co-Investment
There are two types of employers who will benefit from government support 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 will pay 90% of the costs of training and assessment. The employer will be responsible for paying 10% of the costs.

Purchasing training Apprenticeships started before 1 May will be funded through to completion according to the existing rules Levied employers buying training from May 2017 Can commit to apprenticeship starts from the beginning of May Funds will automatically leave the digital account on a monthly basis Non-levied employers buying training from May 2017 Continue to make payments direct to providers Move onto the digital system at a later date New funding system comes into effect on 1 May 2017 The cost will be spread over the lifetime of the apprenticeship. We will hold back 20% of the total cost, to be paid on completion of the apprenticeship.

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

Key changes Proposals in August Final funding policy
Expiry 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 with an Education, Health and Care plan. Removal of disadvantage uplift Retain a simplified version of current system for frameworks for one year to support those from disadvantaged areas whilst review best way to support disadvantaged groups.

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 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.

Additional support in areas of disadvantage
Funding bands for frameworks We will allocate each individual framework pathway to: the nearest funding band based on the current rate of funding the government pays providers for training adult apprentices but with some extra support… 16-18 uplift Transitional support of 20% of funding band maximum paid directly to training providers Also applies to year olds formerly in care or have Education and Health Care plan STEM Support For all STEM framework pathways we will increase the current government-funded adult rate by 40% at Level 2 and 80% at Level 3 and above, and then allocate these frameworks to the nearest funding band. Additional support in areas of disadvantage Training providers receive: 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

Funding bands for standards
Principles Lower cost standards should be allocated to the nearest funding band Those standards currently assigned to the widest and highest cost funding band will be allocated to a new band within this range. Taking into account: Actual prices employers have negotiated with providers. Evidence from Trailblazer employers on the estimated costs eligible apprenticeship training The funding bands set for equivalent frameworks The level and nature of the training, and consistency across similar types of apprenticeship standard.

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 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)

Funding rules Prior qualifications
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

Contracting Once you have been selected by an employer to deliver training to their apprentices, you will need to negotiate costs and ensure contracts are in place so that the funding can flow. The costs for any end point assessment will be included in the total price for the apprenticeship you agree with the employer. You will be required to pass this agreed amount on to the assessment organisation selected by the employer.

Working with employers with a digital account
Provider Employer A Employer B (C, D, E …) Skills Funding Agency Contract for Service Provider Agreement Apprenticeships – employer A Apprenticeships – employer B (C, D, E…) Terms & Conditions + Employer Agreement All providers need to be listed on the Register of Apprenticeship Training Providers Subcontractor, if selected Contract for Service End-point assessment organisation (standards only) Payment contract

Working with employers without a digital account
End point assessment organisation (standards only) Provider Employer Skills Funding Agency Agreement to cover co-investment Contract for service Any provider wishing to work with employers who do not pay the levy must: be listed on the Register of Apprenticeship Training Providers and have successfully completed an invitation to tender to work with employers that do not pay the levy Payment contract Subcontractor, if selected Contract for Service

Key milestones 2016 October
Publish funding bands that apply in the new system Full set of technical rules that underpin the funding system Calculation for English proportion Pilot testing with employers Register of Apprenticeship Training Providers open November December Further employer guidance from HMRC on how to calculate and pay the apprenticeship levy

Key milestones 2017 and on January
Employers to register on the digital apprenticeship service February March National Apprenticeship Week (6 to 10 March) April Levy paid May Service live Make levy commitments To 2020 All employers to use the service

Key publications Apprenticeship funding: how it will work
Apprenticeship funding and performance management rules to 2018 Feedback on the draft rules Apprenticeship employer-provider guide Funding bands Estimate my apprenticeship funding tool Working with the SFA as an apprenticeship training provider ILR specification 2016 to 2017 Find apprenticeship training

What is the digital apprenticeship service?
National Apprenticeship Service

Recruit an apprentice

gateway.gov.uk

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Why not say 'thanks' for the slides at Headline sponsor Extended Q&A on the funding reforms Visit for funding workshops Sign up for free updates and resources at 48

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Why not say 'thanks' for the slides at Funding reform webinar Headline sponsor Using technology to harvest the opportunities from apprentice reforms Fiona Hudson-Kelly, CEO at Smart Assessor Visit for funding workshops Sign up for free updates and resources at 50

The Register of Apprenticeship Training Providers
October 2016

Content purpose application routes interested in applying
application process next steps and timeline.

From proposal to policy
Proposals in August Final policy All organisations must apply to the register of apprenticeship training organisations (RoATP). Any subcontractor delivering less than £100,000 of training per year is not required to apply to the RoATP. Main provider must always deliver a significant majority of each framework or standard they contract with the employer to deliver. Main providers must directly provide training for each employer’s apprenticeship programme that they deliver. Parent guarantees not accepted Parent company guarantees accepted for one year.

Register of Apprenticeship Training Providers
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 Register of Apprenticeship Training Providers

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

Main application route
The main application route is for organisations that: want to directly deliver any value of apprenticeship training want to be eligible for selection through the digital apprenticeship service are a levied employer and want to train staff in their own supply chain or apprentices in other organisations have the capacity and capability to deliver most of the frameworks and standards that they offer want to participate in the SFA procurement for delivery of apprenticeship training to employers that will not have a digital account to pay for apprenticeship training

Employer provider route
The employer provider route is for levy paying employers that: want to provide training to their own staff want to act as a subcontractor to their appointed main provider, delivering training to their own staff. Organisations that apply to this route cannot: deliver apprenticeship training to other organisations, including their supply chain. If you plan to deliver less than £100k as a subcontractor then you are not required to apply

Supporting route The supporting route is for organisations that:
want to deliver as a subcontractor only are new to the apprenticeship market do not have the capacity to be a main provider. Organisations that apply to this route cannot: deliver more than £500,000 of training per year deliver apprenticeship training directly to employers. If you plan to deliver less than £100k as a subcontractor then you are not required to apply

Interested in applying?
will you be delivering apprenticeship training? have you been trading as a business for at least three months? have you been awarded an Ofsted grade 4 for your ‘effectiveness of apprenticeship provision’ within the last three years? have you been awarded an Ofsted grade 4 for your ‘overall effectiveness’ within the last three years? have you completed the financial health self assessment and scored at least a satisfactory?

Interested in applying?
Familiarise yourself with the Joining the Register of Apprenticeship Training Providers – application instructions to learn more about our requirements registrations you need to undertake – UKRLP and Bravo on-line application route

Application overview Register with UKRLP Register with ICO
To obtain a UKPRN to include on your application. Register with ICO Register with information commissioners Office (ICO) for education and training. Register for an account on the bravo e-tendering portal Read the registration guidance on our website. Complete your application Read Joining the Register of Apprenticeship Training Providers – application instructions to help you. Ensure you sense check your application and upload the right information.

Application Due diligence:
we capture and verify your organisation details you self declare against our mandatory and discretionary exclusion criteria compliance questions.

Application Financial health: upload a self-assessment toolkit
some organisations exempt from submitting financial statements most organisations must populate the toolkit with their latest financial information and upload their latest financial statements organisations graded as satisfactory, good or outstanding will pass our financial health assessment.

Application Capacity and capability to deliver that you should consider: how you will ensure safeguarding of apprentices the PREVENT strategy how equality and diversity is built into your processes and policies details of your apprenticeship training offer including the expertise of your staff and ability to meet the needs of an apprentice.

Common mistakes when making an application
Not reading our Joining the Register of Apprenticeship Training Providers – application instructions Failing to upload financial statements if not exempt. Not proof reading an application. Not fully answering questions that require a written answer. Not allowing enough time to complete an application.

Next steps Be mindful of the deadline. Sense check your application.
Check contact details on the e-tendering portal.

Digital apprenticeship service
Main apprenticeship route:- the course directory portal review your information visible to employers on the course directory portal.

Timeline 2016 2016 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

Further information Register of apprenticeship training providers webpage apprenticeship-training-providers Joining the Register of Apprenticeship Training Providers – application instructions financial health self-assessment toolkit guidance to access the e-tendering portal and application questions information on the procurement is available on contracts finder

Invitation to tender Apprenticeship training delivery for employers not using the digital account
October 2016

Content background objective process overview
specification questionnaire and funding/volume what you must not do and common mistakes timeline next steps

Background The way government funds apprenticeships in England is changing ITT is for delivery of apprenticeship training to employers that will not be using the digital apprenticeship service digital account Public Contracts Regulations light-touch regime Those successful in the ITT will be awarded a contract for services with the SFA Procurement is for new apprenticeship starts only, from May 2017

Objective This procurement will support government ambition to:
Increase the number of apprenticeships Supply quality training that modern economy needs Have coverage across sectors, levels and England Offer a wide range of apprenticeship standards, and frameworks that have not yet been replaced It is important that those successful are able to, and willing to, flexibly meet the evolving needs of smaller employers.

Procurement process overview
If you are interested in taking part in the procurement you must: Complete PQQ – Main Route (RoATP) Read the specification for this procurement Fully complete and submit the invitation to tender for the procurement specification questionnaire funding and volumes spreadsheet Complete all the above by 5.00pm on 25 November 2016

Specification questionnaire
What applicants will need to demonstrate/consider: 1. Readiness to deliver from the contract commencement date 2. Track record 3. Management, reporting and quality assurance 4. Engaging with and meeting the needs of employers 5. Delivery of wider apprenticeship training support for employers and their apprentices 6. A comprehensive plan for the delivery of the Service

Evaluation of specification questionnaire
Fully meets requirements Meets most requirements Partially meets Fails to meet / no answer provided 100 75 40

Evaluation criteria table
Related question Maximum available score Minimum acceptable score Readiness to deliver 1 100 75 Track record of delivering the Service 2 Management, reporting and quality assurance 3 40 Engaging with and meeting the needs of employers 4 Delivery of wider apprenticeship training support for employers and their apprentices 5 40 Delivery plan 6

Funding and volumes This is an Excel spreadsheet where we ask for:
Number of apprenticeship starts you will offer Estimated delivery costs Estimated additional costs Sector subject areas and levels Regions you plan to deliver in

Funding and volumes To help you complete the spreadsheet you should consider the following: Guidance tab in the spreadsheet Document: Apprenticeship funding in England from May 2017 ceship-funding-from-may-2017

What applicants must not do
Seek help, assistance or opinions from SFA or DfE staff on the procurement process, outside of the support provided on the e-tendering portal message board Submit a partially completed ITT Leave any queries to the last minute Attempt to submit the ITT after the deadline

Common mistakes made Not reading the specification
Failing to upload all requested documentation Not addressing all areas in the specification questionnaire Applications are not proof read Leaving your application to the last minute

Contracts Minimum initial contract award is £100,000
Maximum initial contract award is £5,000,000 We will not award more than 100% of your turnover Organisations without financial track record have further limits in place

Procurement timeline Activity Deadline Publication of ITT
25 October 2016 Applicant briefing by narrated presentation From 25 October 2016 Last day to send clarification messages on the e-tendering portal 5pm on 23 November 2016 PQQ 28910: Main Route - Register of Apprenticeship Training Providers closes 5pm on 25 November 2016 ITT : Apprenticeship training delivery for employers not using the digital account closes Notification of tender results 14 March 2017 Day 1 of mandatory standstill period Day 10 of mandatory standstill period 24 March 2017 Contracts issued from 31 March 2017 Delivery commences 01 May 2017

Next steps Contracts finder Bravo e-tendering portal guidance
de91-4f5d-bf83-1fbf3d401e61 Bravo e-tendering portal guidance ment_data/file/562651/RoATP_E- tendering_portal_guidance_October_2016.pdf Ensure you have read the requirements and if you have any queries please use the Bravo message board and you will receive a response within 72 hours.

Why not say 'thanks' for the slides at Headline sponsor Modelling the impact of the new levy system Visit for funding workshops Sign up for free updates and resources at 85

Calculating funding for apprenticeships
> There are now three funding methodologies 1. Framework starts before 1st May 2017 Listed rates unchanged from 2012/13, with 20% for achievement, double payment in month one and variations for: delivery location; disadvantage; age at start; size of employer and no mandatory employer cash contribution. 2. Standards starts before 1st May 2017 Pilot upper limits worth 2/3rd of provider income with mandatory employer cash contribution (1/3rd) substantial employer incentives for 16-18, small employers and end-point assessment achievement 3. Framework and standards starts from 1st May upper limits worth 100% for levied employers based on negotiation up to the upper limit, 100% of upper limit for SMEs with 16-18s from SFA else negotiated upper limit for non-levied employers split 10% employer cash payment and 90% SFA.

x x x x = 1. Apprenticeship funding formula (per qual) BR PW DU ACU
5 July 2016 1. Apprenticeship funding formula (per qual) BR Base rate PW Programme Weighting DU Disadvantage uplift ACU Area cost uplift Discounts Co-funding & employer discounts Funding x x x x = Cash rate listed on LARS for fully-funded based on 12/13 SLN & National Funding Rate (NFR) Weighting for sector type, listed on LARS Weighting based on learner home postcode in the ILR. Could be as much as 32% (1.32) extra in most deprived area. When planning use a historical average A south east (mainly London) weighting based on main delivery location. E.g. Up to 20% (1.2) extra if delivered in central London 19+ co-funding means the funding is halved (0.5) 19+ large employer (1000+ employees) discount reduces funding by a further 25% (0.75) 80% for monthly on-programme payments (double in month one) 20% for achievement of Eng and Maths and rest when fully achieved framework PW Weighting A (Base) 1 B (Low) 1.12 C (Medium) 1.3 D (High) 1.6 E (appren only) 1.72 G (Specialist) 1.72/1.92 H (appren only) 1.2 J (appren only) 1.25 K (appren only) 1.5 L (appren only) 1.15 16-18 NFR £2,804 19-23 NFR £2,615 16-18 is 7.23% more than 19-23 24+ NFR £2,092 20% less than 19-23 For more events visit lsect.com

2. Standards pilot funding (full cap)
Funding cap band 1 2 3 4 5 6 Core Gov Contribution (CGC) [max] £2,000 £3,000 £6,000 £8,000 £13,000 £18,000 16-18 employer incentive [fixed] £600 £900 £1,800 £2,400 £3,900 £5,400 Small employer incentive [fixed] £500 £1,200 £1,950 £2,700 Completion employer incentive [fixed] Maximum total government contribution £3,600 £4,900 £9,600 £12,800 £20,800 £28,800 DfE or BIS payments via SFA Employer contribution for training and assessment (to achieve max cap) £1,000 £1,500 £3,000 £4,000 £6,500 £9,000 Core Government Contribution (CGC) £2,000 £6,000 £8,000 £18,000 ‘Co-payment' : Provider income (excluding Eng & £471 each) £4,500 £12,000 £14,500 £27,000 Provider income Large employer (50+ staff) with completed 19+ keeps £500 £900 £1,200 £1,950 £2,700 Large employer (50+ staff) with completed keeps £1,100 £1,400 £3,600 £5,850 £8,100 Small employer (<50 staff) with completed 19+ keeps £1,000 £1,800 £2,400 £3,900 £5,400 Small employer (<50 staff) with completed keeps £1,600 £1,900 £4,800 £7,800 £10,800 Total employer incentives Employer contribution greater than fee? Net cost to large employer (50+ staff) with completed 19+ -£500 -£1,000 -£2,100 -£2,800 -£4,550 -£6,300 Net cost to large employer (50+ staff) with completed 16-18 £100 -£100 -£300 -£400 -£650 -£900 Net cost to small employer (<50 staff) with completed 19+ £0 -£1,200 -£1,600 -£2,600 -£3,600 Net cost to small employer (<50 staff) with completed 16-18 £600 £400 £800 £1,300 £1,800

3. Levy funding for all starts from 1 May 2017
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 Non-levied fee (10%) £150 £200 £250 £300 £350 £400 £500 £600 £900 £1,200 £1,500 £1,800 £2,100 £2,400 £2,700 16-18 employer incentive £1,000 16-18 provider incentive (standards) £1,000 16-18 provider incentive (frameworks) £1,300 £1,400 £1,500 £1,600 £1,700 £1,800 £2,000 £2,200 £2,800 £3,400 £4,000 £4,600 £5,200 £5,800 £6,400 Simplified Disadvantage uplift for frameworks (up to £600 per apprentice) English & £471 each

Comparing framework funding for 1 May starts
16-18 example (provisional and final)

Comparing framework funding for 1 May starts
19+ example (final)

Three things to note when modelling frameworks
> Modelling old and new world for frameworks not easy as compares complicated old with simple(ish) new but with an assumed rate at the upper band… > STEM subjects better funded from 1 May assuming you aren’t currently charging employers > The highest priority apprentices now (youngest and living in most disadvantaged area) typically sees funding percentage fall furthest -perverse but true

Opportunities?: watch and predict trends
Management is 3rd most popular apprenticeship

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