Update on apprenticeship funding guidance and rules

Posted on Oct 30, 2018

The recently published versions of the ESFA’s apprenticeship funding guidance and rules for 2018 to 2019 contain some changes to apprenticeship policy, as well as several rule changes, new evidence requirements and lots of clarifications. These should make it easier for training providers and employers to navigate the apprenticeship funding system so that the focus can quite rightly be on meeting the needs of employers and their apprentices more effectively. Additionally, some changes to funding arrangements have been implemented earlier, e.g. transfer of up to 10% of levy funds to other employers and Apprenticeship Training Agencies that applied to new starts from 1 May 2018, and others may be delayed till 2019 to 2020, e.g. non-levy paying employers accessing the apprenticeship service.

I want to focus on the key policy and rules changes, and clarifications, that I think will have the greatest impacts on employers, providers and learners. Some of these changes have been well documented and have generated a mix of responses from different sources, e.g. increasing the number of funding bands from 15 to 30; others are less obvious but can affect the ability of some learners to take up apprenticeships, e.g. introduction of the care-leaver bursary. The number of funding bands for apprenticeship standards and frameworks has been increased from 15 to 30 from 1 August 2018, with the upper limit of those bands still ranging from £1,500 to £27,000. This was in response to concerns that the employers did not feel that there was enough room for the negotiation of the prices for training and assessment with providers, and that maximum value for money for taxpayers was not being achieved. However, with the majority of employers with less than 50 employees, not required to make any contribution to the cost of training 16-18 year old apprentices (and eligible 19-24 year olds), the impact in terms of lowering prices may be limited. The continuation of the policy to uplift funding for 16 to 18 year olds (and eligible 19 to 24 year olds) starting frameworks by 20%, recognises the additional costs to providers of meeting the needs of these learners and will have a greater impact on the viability of apprenticeship delivery and the recruitment of younger apprentices. New rules have been introduced to ensure that before these additional payments are claimed by providers there is evidence of apprentice eligibility and that the apprentice consents to this information being shared with their employer, e.g. if they have an EHC plan.

The continuation of disadvantage uplift funding for apprentices undertaking frameworks from the most deprived 27% postal code areas will allow these learners to access the opportunities provided by apprenticeships, fund some of the additional costs of these learners and also provide more planning stability for providers. Because standards are generally funded at higher levels than frameworks, this additional support is not applied to them, but this might be reviewed in the light of more evidence on their costs. Additionally, 16-24 year old care leavers will now also receive a £1,000 bursary when they begin their apprenticeships, in recognition of the heightened financial pressures that these young people can face in living independently. The bursary will be paid once to the care leaver at the start of their apprenticeship via the provider. New rules and evidence requirements have been introduced to support this policy change, e.g. consent to inform the employer. The transfer of levy funds to other employers and Apprenticeship Training Agencies that applied to new starts from 1 May has opened up opportunities for larger employers to support the take up of apprenticeships in these employers, especially in the supply chain. However, the transfer is limited initially to no more than 10% of eligible levy funds and can only be used to fund new starts on apprenticeship standards, not frameworks. Employers would like to see the rules relaxed on the transfer of levy funds to ensure that more of their levy funds are spent and are seeking more flexibility on the pooling of levy funds across several employers.

There is greater recognition of the importance of additional support for apprentices, including support for apprentices with learning difficulties and/or disabilities. Recent research shows that most providers are aware of and use learning support and disadvantage uplift funding but few are aware of excess and exceptional learning support, additional payments for 19-24 year olds with ECHP and care leavers, and Access to Work funding. The updated funding rules provide greater clarity on learning support eligibility and the types of support available. Providers must provide evidence of any support needs identified, including assessment of those needs, how those needs will be met, and a record of all outcomes. The process for claiming exceptional learning support is also clarified. For audit purposes, there is further clarification of what activities can constitute 20% off-the-job training, and that the calculation of the required amount should take account of the employee’s statutory leave entitlement. Clarification of how to account for prior learning is included in response to questions raised by providers and the rules and evidence relating to prior learning is separately covered. Although there is little change in relation to agreeing the use of subcontractors with employers, there are new rules on reporting the use of subcontractors to ESFA, e.g. updating your subcontractor declaration if your arrangements change during the year. In the medium term there are some changes that will affect the delivery of apprenticeships and the total numbers of new starts. The IFA review of funding bands for popular standards may lead to some notable reductions in funding and, therefore, the viability of provision, e.g. hairdressing level 2 and management at several levels. The plan to bring all employers into the apprenticeship service may be delayed for a year, but this could provide opportunities for dual running and comparative testing of the two systems.

All in all, most of the changes do not affect the overall direction of policy in relation to apprenticeships and their funding. The funding methodology remains largely unchanged and the audit of apprenticeships will focus mostly on evidence of collecting the co-investment funds from non-levy paying employers and 20% off-the-job training. What is more concerning in the short term is the fall in the number of starts compared to the year before changes were introduced, and the likely underspend by levy paying employers. In the longer term we need to create a more sustainable and high quality apprenticeship system focused on level 3 and above. Finally, there are more significant questions over both the demand for and supply of apprenticeships - not just about employer calculations of impacts relative to costs but also providers’ estimates of revenue and costs of different delivery models and their viability. A lot still remains uncertain.

Beej Kaczmarczyk – Director at Learning Curve Group

Back to news