The Changing National Skills Funding Landscape

Cat Settle Head of Employer and Delivery Services, Skills Funding Agency

English Apprenticeships:

Our 2020 Vision

A Programme of Reforms

The government is committed to significantly increase the quantity and quality of apprenticeships in England to reach 3 million starts in 2020:

• New Institute for Apprenticeships led by employers to support quality apprenticeships • Employers at the heart of designing new Apprenticeships Standards through the Trailblazer

programme • Apprenticeships will be given equal legal protection to degrees

• Abolishing employer NICs for apprentices under the age of 25 from April 2016

• Apprenticeship targets for public sector bodies – consulting on new duty on public sector to have

2.3% of its workforce comprised of apprenticeships

But a step change in the scale and quality of the apprenticeship programme also requires a step change in funding and the introduction of an apprenticeship levy

Action is needed to address current trends

The Benefits of Apprenticeships

• Higher qualifications lead to improved employment prospects, productivity and wages for apprentices.

• Apprenticeships also offer excellent returns to employers and the taxpayer.

Funding Apprenticeships – The Levy • We have already increased the minimum wage for apprentices by over 20% to £3.30 in October

2015.

• The Government is introducing a levy on employers to fund apprenticeships. This will be collected through PAYE. Guidance will be provided in Spring 2016.

• Employers who pay the levy and are committed to apprenticeships will be able to get out more than they pay in via a top up in their digital account.

• Employers will be able to choose where to direct the funds in their digital account. Where employers choose not to, we will make these available more widely.

• Guidance on funding for frameworks and standards in 2016/17 was published in January.

Two worked examples

• 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

Getting out more than you put in

• Employer has £12,000 annually entering their levy account

• Monthly account funding = £1,000 • Top up: 10% x £1,000 = £100 • Levy monthly account increase: £1,000 +

£100 = £1,100 • £13,200 annually to spend on

Apprenticeships

Employers who pay the levy and are committed to apprenticeships training will be able to get out more than they pay in to the levy. The government will apply a 10% top-up to monthly funds entering levy paying employers digital accounts, for apprenticeship training in England, from April 2017.

Worked example

How the Levy will work G

ove

rnm

ent

Trai

nin

g

Pro

vid

er

Emp

loye

r

Receive training for apprentice

Redeem “vouchers”

Our objectives: Employer control and simplicity

Our objectives: Get the machinery right to provide a quality service while protecting public purse

HMRC collect levy (PAYE)

Employ Apprentice

Offer apprenticeship training

Receive vouchers (Digital Service)

Timely data on training

Pay for training with “vouchers”

Employer has online account

Provide training to apprentice

Check training is complete

If funding unlocked: Pay

provider

Register with SFA (Ofsted)

Employer and Provider Identity Assurance

Pass data on levy payments from HMRC to BIS

Unused vouchers expire

Top up

Apprenticeship Standards Pilot Funding Model

Apprenticeship Funding Model – from April 2017

Final model for mainstream funding not yet decided, however we do know:

• Employers with a pay bill of less than £3m will not have to pay the levy. This is more than 98% of all employers.

• Those not in scope for the levy will continue to have access to government funding to support apprenticeships and will need to make a financial contribution to the cost of training their apprentices.

• This co-investment rate has not yet been set; but as an example in the apprenticeship standards funding pilot, this rate is £1 employer investment to £2 of government investment up to the cap for the standard.

• All employers will have access to the Digital Apprenticeship Service.

A Sustainable Long-Term Apprenticeship System

• The Institute for Apprenticeships will be an independent employer-led body that will regulate the quality of apprenticeships. It will be set up by April 2017 (shadow form from 2016).

• An independent Chair will lead a small Board of employers, business leaders and their representatives. The Institute will approve apprenticeship standards.

Our reforms and the introduction of the levy will lead to an increased demand from employers. This provides new opportunities for agile providers.

• Outline role: o Approve/reject EOIs, standards and assessment plans o Provide advice and guidance during their development o Determine policy on when standards need to be refreshed or closed o Advise on funding for each standard

Trailblazer Standards

NEW APPRENTICESHIP MODEL

Independent

End

Assessment

(graded)

Completion

and

Certification

On-the-job training

Off-the-job training (minimum

20%)

Employer groups can identify

specifications which lead to

qualifications (work-based learning

and/or underpinning knowledge)

Formative assessment of behaviours

GA

TEW

AY

Re

qu

ire

s e

mp

loye

r si

gn-o

ff

Maths & English

APPRENTICESHIP PROGRAMME CONFIRMATION

How Trailblazers Design Standards and Assessments

Costing template/Cap

allocation

Trailblazer forms & submits expression of interest

Trailblazer writes new standard

Assessment Plan

Approved by Gov’t

Approved by Gov’t

Approved & funding band

allocated

Register of Assessment

Organisations

Online Consultation

Online Consultation

Online Consultation

Delivery

Monthly submission dates to BIS, and regular publication on gov.uk

Progression Routes Higher and Degree Apprenticeships

Standards – Delivery so far

• Over 1400 businesses in over 100 sectors involved

• More than 200 standards published so far

• Around 60% of standards so far are

for Higher and Degree Apprenticeships

Digital Apprenticeship Service The new Digital Apprenticeship Service will provide a new simple online portal for employers

Proceeding with the Digital Apprenticeship Voucher To be

implemented from 2017 – as part of a broader end-to-end service that

simplifies the employer journey and supports them to employ apprentices.

Simplified solution

• Enabling employers to make decisions about taking on apprentices (for

all apprenticeships and all employers including the smallest)

• Giving employers greater purchasing power and oversight of providers

available

• Giving transparency on apprenticeship standards and their costs

Next Steps

SPRING 2016 AUTUMN 2016 APRIL 2017 BY END 2016

•HMRC published draft

clauses for levy legislation

•Enterprise Bill and Finance

Bill Royal Assent

•BIS publish Levy Employer

Guide

•DAS alpha and beta phases

• BIS publish draft funding

rates in June

•BIS publish final funding

rates

•SFA publish draft funding

rules

•DAS Registration opens

•ITB consensus

consultation conducted

•SFA publish final

funding rules

•Full set of final funding

guidelines published

•DAS in operation

•New funding model

implemented

• IfA in place

•New ITB levy orders in

effect

https://www.gov.uk/government/publications/apprenticeship-levy-how-it-will-work/apprenticeship-levy-how-it-will-work

How to Get Involved

If you want to advertise an apprenticeship or find out about apprenticeships in your area you can visit https://www.gov.uk/apply-apprenticeship

If you want to provide any feedback on the apprenticeship levy, you can email apprenticeshipslevyconsultation@bis.gsi.gov.uk