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Understanding the Apprenticeships’ Funding Reforms

Understanding the Apprenticeships’ Funding Reforms

30 September 2016

The Apprenticeship landscape has become quite confusing with SASE Apprenticeship Frameworks running alongside the new Apprenticeship Standards/Trailblazers with different funding models.

From now until April 2017, funding for SASE Apprenticeship Frameworks remains unchanged while new Apprenticeship Standards/Trailblazers are funded by employers and the Government on a one third/two thirds ratio, that is: for each £1 the employer contributes, the Government contributes £2 – up to a maximum funding cap.

On 12 August 2016, the government released new proposals for funding from May 2017, which have been under consultation till 05 September and will be finalised during October 2016.

The main objective of these proposals is to simplify the current dual funding system and encourage employers, especially micro-businesses and SMEs, to recruit apprentices.

The funding model is supposed to be simplified by the creation of 15 funding bands, ranging from £1,500 to £27,000, and all Apprenticeships (current SASE frameworks and new Standards/Trailblazers) will be allocated a funding band, regardless of the age of the learner or geographic location. Please note that this funding doesn’t include Maths and English at Level 2, which will continue to be funded at £471 per qualification where needed in an Apprenticeship.

The incentives for employers to recruit Apprentices are different depending on the size of employer.

If you are an employer with a payroll bill in excess of £3million, from April 2017 you will have to pay a levy which the Government has introduced to raise additional funding. However, you will have control over where and when you spend this funding. From May 2017, providers will no longer have a contract with the Skills Funding Agency to receive direct allocations to fund Apprenticeship programmes (Apprenticeship Standards/Trailblazers and SASE Frameworks) for levy-paying employers. Employers, instead, will decide which provider they want to purchase Apprenticeship delivery from and when payments are made through a new virtual portal set up by the Government called the Digital Apprenticeship Service (DAS). The providers will then receive that money via their monthly ILR return.

If you do not have a payroll bill in excess of £3million, and therefore do not have to pay the levy, the Apprenticeship funding will continue to be channelled through provider allocations and you will be expected to co-invest 10% of the total Apprenticeship cost. Eventually this process will also take place via the new funding system facilitated by the new Digital Apprenticeships Service (DAS).

However, there are additional incentives targeted to increase the recruitment of 16 to 18 year old apprentices. According to the new proposals, if you have no more than 50 employees and recruit 16 to 18 year olds, the Government will fully fund your Apprenticeship cost and you won’t need to contribute 10% towards its delivery.

In addition, any employer regardless of size who employs a 16-18 year old apprentice will receive an incentive payment of £1000 and their training provider will also receive an additional incentive payment of £1,000.

Are these proposals better than the current system? How can you benefit from them? The business model has changed completely empowering employers to ask for the training programme that suits their own apprentices’ specific needs and therefore may contribute to an increase in their return on investment in Apprenticeships.

This employer-led model will have an impact on how training organisations deliver Apprenticeships: they will need to be flexible enough to meet each employer’s needs and they may need to offer different solutions depending on each of those employers’ requirements instead of a ‘one size fits all’ solution, what will cause a big change compared to how they operate now. In addition, for those training organisations who wish to play a role in any type of Apprenticeship delivery (both Apprenticeship Standards/Trailblazers and SASE Frameworks) from April 2017 they must be listed on the Register of Apprenticeship Training Providers, and this includes subcontractors.

Further details on the final funding proposals and their implementation are expected to be announced by the Government in October 2016, so watch this space!

More information about the new Apprenticeships’ funding can be found at City & Guilds Apprenticeship Funding page.