Further Education Evolution Beverley Smith BA(Hons) CEO Principal

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This month, we are trying to keep you updated with some snip-its from the Education sector.

15 Sept

Apprenticeship Funding made easy (?)

by Beverley Smith

With thanks to Alan Birks, who has supplied a summary of the Governments proposals for Apprenticeship funding going forward, August 2016.

Alongside the target of achieving 3 million new apprenticeships by 2020, the UK government’s main aim is to transfer to employers the control of apprenticeship funding. The proposed operational model for the apprenticeship levy and the digital account service to be used for paying for training was published in April this year, the main features of which included the following:

  • From 5 April 2017 employers with an annual pay bill of more than £273 million would be charged a levy of 0.5% of their pay bill to help pay for apprenticeships. Some employer groups (e.g. the Confederation of British industry) claim that this measure constituted ‘a further tax on business’ and are still arguing for the introduction of the levy to be delayed.
  • The levy would be paid monthly by employers through the ‘Pay as You Earn’ (PAYE) system, alongside income tax and National Insurance Contributions (NICs).
  • Employers could recover some (or all) of the money paid into the levy through expenditure on apprenticeship training. This would include spending on apprentices of all ages and at all levels, including graduate apprentices at Level 6 and 7. The levy could also be used by employers to fund existing employee development as long as the required criteria was met.
  • There would be a requirement for a cash contribution from employers towards the cost of individual apprenticeships. The amount was not specified, although there were rumours that it could be 50% or higher. This led to fears that smaller businesses would be deterred from taking on apprentices.
  • A digital apprenticeship voucher system would be introduced which could be used to purchase apprenticeship training from approved providers. The system would involve employers registering their details onto an online system in order to establish a digital account. The system would provide employers with a code that can be used to make payments to a learning provider. The provider (which could include a college) then reclaims the value of the voucher from the Skills Funding Agency (SFA). Latest government proposals

On 12 August the Department for Education (DfE) published its long awaited final proposals for apprenticeship funding with effect from May 2017. The proposals also contain details of how the new apprenticeship levy is intended to work. The main features are as follows:

  • Employers that are not in scope of the levy will have to pay 10% of the training costs, with the remaining 90% paid by the government. This means that in actual practice the government will pay 90% of the costs of apprenticeship provision for around 98% of all employers.
  • Employers with fewer than 50 employees will not be required to contribute towards training costs of 16-18 apprentices. These will be 100% funded by the government. In addition, when employers take on a 16-18 apprentice, they will receive £1,000 to help ‘˜meet the extra costs associated with this’. This would be paid to employers in two equal instalments after three months and 12 months, as under the current funding system. Initially, these payments will be made to employers via their training provider; eventually, this will be paid directly to employers.
  • Extra support of £2,000 will be available for employers and training providers that take on 16-18 year-olds, or young care leavers with an Education, Health and Care (EHC) plan. The employer and provider will each receive £1,000. The government will also meet 100% of the training costs of young people aged 19-24 who have an EHC, along with payments of £1,000 will be made available to employers and training providers to help support these individuals.
  • Employers will be able to use levy funds to retrain existing workers in new skills, even if they have prior qualifications. The government says this will give employers ‘the freedom to make the training decisions that are right for them’, and to enable them to ‘˜train any individual to start an apprenticeship, as long as it is significantly different from their previous qualifications’.
  • Employers that are in scope of the levy (those with an annual pay bill of more than £3 million) that want to spend more on training than is in their digital account will have 90% of their additional apprenticeship training costs funded by government.
  • The proposed funding system will consist of 15 bands, each with an upper limit ranging from £1,500 to £7,000. This will be the maximum amount of digital funds an employer which pays the levy can use towards an individual apprenticeship or that the government will co-invest. All existing and new apprenticeship frameworks and standards will be placed within one of these funding bands, with employers left to negotiate prices with providers. These upper limits will also cap the maximum price that government will ‘co-invest’ towards cost of apprenticeships.
  • For science, technology, engineering and mathematics framework pathways, the government is proposing to increase the 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. This, says the government, ‘takes into account the fact that employers of these apprentices are currently disproportionately likely to be paying extra to providers on top of the funding provided by government’. The uplift will be applied to the following areas: engineering and manufacturing technologies; information and communication technology; science and mathematics; and construction, planning and the built environment.
  • Training providers will receive £471 for helping apprentices gain the minimum standard of Level 2 in English and mathematics. This will not be deducted from an employer's digital account.
  • Training providers will also be paid £150 per month to support apprentices with conditions such as dyslexia, or other learning difficulties or other disabilities, plus additional costs based on evidenced need.
  • Initially, around £500 million raised from the levy will be made available to the Scottish Government, the Welsh Government and the Northern Ireland Executive to fund their apprenticeship programmes. However, how these funds will be allocated will be for each devolved nation to decide. The devolved nations are responsible for their own skills funding and they may or may not allocate the funds they receive from levy to the current pot of funding they use for apprenticeships.
  • Employers will be able to use the funds in their digital account and benefit from government co-investment support whether they operate in England or in other parts of the UK.

Further details on the government's apprenticeship funding proposals can be accessed at:

More on Apprenticeships from an excellent tweet/post by Lyndsay McCurdy, Apprenticeship4England CEO via twitter... https://www.linkedin.com/pulse/apprenticeship-levy-conference-27th-october-welcome-centre-mccurdy-1

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Beverley Smith

Beverley Smith

BA (Hons) MA PGCE CEO Principal