THE APPRENTICESHIP REFORMS FUNDING UPDATE 12 JULY 2016 BRYONY KINGSLAND UK FUNDING MANAGER
AGENDA Some key dates for funding information Apprenticeship levy update New register to access apprenticeship funding Funding changes & Levy Overview of apprenticeship funding process Questions
UPCOMING ANNOUNCEMENTS Further Levy Announcements July 2016 October 2016 Provisional funding bands - the maximum funding available for each apprenticeship, from 1 st April 2017 Provisional level of the government support available for non-levy paying employers. Provisional level of incentive employers may get for 16-18 year old apprenticeships. Provisional funding for English and maths training in apprenticeships from April 2017 Eligibility rules that set who employers are able to spend apprenticeship funding on and where The final levels of funding, government support, 16-18 payments, and English and maths payments for apprentices starting from April 2017 Full draft funding and eligibility rules Performance management and audit arrangements More information on who can provide apprenticeship training, and how employers can set up their organisation to deliver apprenticeship training
APPRENTICESHIP LEVY UPDATE Levy will be 0.5% of any employer s pay-bill over 3 million If an employer has calculated that they will pay the apprenticeship levy, they will need to declare this and include it in the usual PAYE payment to HMRC. It is the employer s responsibility to declare it to HMRC! HMRC will publish Levy Guidance in December this year Levy payment for employers will be based on the total amount of earnings subject to Class 1 secondary National Insurance Contributions (NICs) Government will add an extra 10% uplift to levy (England only). If levy amount is used up, employers can co-invest with government to have more apprenticeships delivered
APPRENTICESHIP LEVY UPDATE The levy payment process will operate on a monthly basis, alongside PAYE processes. Levy monthly amounts will accumulate in Digital Apprenticeship Service (DAS) throughout the year Any unused allowance will be carried from one month to the next Funds will expire 18 months after they enter the employer s Digital Apprenticeship Service account and be removed. Employers will be able to register to set up an account on the Digital Apprenticeship Service from January 2017. There will be guidance to assist. Non-levy paying employers will be required to contribute to the cost of apprenticeship delivery via a Government co-funding arrangement. Soon to be confirmed.
APPRENTICESHIP LEVY UPDATE SFA and BIS intend to change the arrangements for funding apprenticeship frameworks, in preparation for April 1 st 2017 All frameworks will be put into a funding band, to be announced (in draft) by end of July SFA are removing apprenticeship frameworks that have low registration or where an apprenticeship standard has been developed that replaces the framework Providers wishing to deliver apprenticeships from 1 st April 17 onwards, will have to register on the new Register of Apprenticeship Training Organisations (ROATO). Framework Consultation : https://www.surveymonkey.co.uk/r/kgzbwxk
REGISTER OF APPRENTICESHIP TRAINING ORGANISATIONS (ROATA) Cannot deliver or be funded for apprenticeships if not on this new register. Separate from ROTO Strong focus on applicants capability to deliver high quality apprenticeships, alongside applicant s fitness and ability to receive public funding SFA/BIS want to raise the bar via increased information requirements - asked for by employers SFA/BIS looking at reviewing applications for three routes Main provider Specialist provider Employer/Provider Four areas will be tested Financial Health Due Diligence Quality Readiness to deliver
REGISTER OF APPRENTICESHIP TRAINING ORGANISATIONS TIMELINE Any provider wanting to deliver apprenticeship after 1st April 2017 will have to register on a new Apprenticeship Register. July 16 Consultation on register closing early August Sept 16 September 16, Register opens for first applications Publish V1 of Register. Re-open register for second round applications Jan 17 Oct Register closes. Evaluation of first applications Oct-Dec April 17 Publish V2 of register. Register will re-open every 3 months
DIGITAL APPRENTICESHIP SERVICE (DAS) DAS will be ready in BETA form by year end (sits on.gov server) There will be a free text box to enable providers to sell themselves to employers Potentially also a Trip Advisor process for employers to feedback comments on provider performance Entry page has several options Financial Information Provider Information Planning tool Looks much like a bank statement Will show percentage of English funds available to spend In real terms, the cash will still flow to providers from the SFA
FUNDING CAPS UNTIL 31 MARCH 2017 At the moment, for every 1 spent on training by an employer, the Government contributes 2 up to a maximum cap. THERE ARE SIX CAPS These depend on the apprenticeship being undertaken. Each new Standard has a cap allocated Additionally, three incentive payments are available: Funding band Funding band Core Government contribution cap ( ) Employer contribution ( ) 6 18,000 9,000 5 13,000 6,500 4 8,000 4,000 3 6,000 3,000 2 3,000 1,500 1 2,000 1,000 Recruiting to a 16 to 18-year-old For a small business (<50) For successful completion ( ) Maximum Incentive Payments ( ) 6 5,400 2,700 2,700 10,800 5 3,900 1,950 1,950 7,800 4 2,400 1,200 1,200 4,800 3 1,800 900 900 3,600 2 900 500 500 1,900 1 600 500 500 1,600
FUNDING BANDS FROM 1 APRIL 2017 For non-levy paying employers, there will be a government contribution, to be confirmed later in July (leaked info says a 1:9 ratio). Which would indicate for every 1 spent by employers, the Government will contribute 9 THERE ARE??? BANDS These depend on the apprenticeship being undertaken. Every apprenticeship - framework or standard will put into a band. Funding band (example) Band 4?? Band 3?? Core Government contribution band ( ) Employer contribution for non-levy ( ) Top of band - 18,000 2000??? Mid band 16,000 Lower band - 14,000 13,000??? 10,500 Additionally, there may be other incentives available 8,000 7000? Band 2?? 6,000 4500 3,000? Band 1?? 2500 2,000
HOW THE LEVY WILL WORK Example 1: An employer with a pay-bill of 2,000,000 Levy sum 0.5% of 2,000,000 = 10,000 = No levy to pay (total amount of the levy sum is less than the 15,000 allowance) Example 2: An employer with a pay-bill of 5,000,000 Levy sum 0.5% of 5,000,000 = 25,000 (minus levy allowance of 15,000) = 10,000 levy to pay Example 3. College with a 20 million paybill Levy sum: 0.5% x 20,000,000 = 100,000 Allowance: 100,000-15,000 = 85,000 annual levy payment The allowance is not an amount paid to an employer, it is a percentage amount of allowed pay-bill funding before the levy is due.
OVERVIEW OF LEVY PROCESS TO DRAW DOWN FUNDS 1 2 3 4 Employer recruits/flags apprentice (could be internal staff) Employer selects provider from DAS initial negotiations take place (sensible to have pricing schedules in place) Provider and employer agree and sign written agreement Employer flags on DAS prompts payment schedule and SFA issues auxiliary agreement for each contract between provider and employer Provider establishes learner evidence pack Sets up ILR registration, including cash contribution (from non-levy paying employers) End point assessment (EPA) when apprentice reaches gateway Provider pays EPA organisation from levy funds EPA organisation certificates apprenticeship Provider pays employer any final remaining incentives
DUAL SYSTEM LEVY PAYING EMPLOYERS Levy paid Price agreed Monthly deductions paid to provider over life of apprenticeship Co-investment top up if insufficient funds NON-LEVY PAYING EMPLOYERS Employer s own funds Agreed price and payment schedule Invoiced by provider Coinvestment with Government
KEY DATES FOR ACTION 2016 JUL New register consultation and draft funding information SEPT New register opens for first applications OCT New register closes SFA/BIS will publish draft funding rules for 1 st April 2017 onwards DEC HMRC will publish levy guidance for employers 2017 JAN V1 of register published/register opened for round 2 applications. Employers can begin registering on das to set up funding account APR V2 of register published and levy starts APR Apprenticeship frameworks move to cap funding APR All apprenticeship delivery moves to new arrangements MAY Employers will see first levy funds for spend on DAS 2018 Non-levy paying employers access DAS
APPRENTICESHIPS ARE CHANGING OUR COMMITMENT NEVER WILL 16 Leading the discussion, with both providers and employers Working with trailblazers Developing new products and services Events and workshops Up-to-date and helpful information on website www.cityandguilds.com/apprenticeships
FURTHER SUPPORT FROM US Download our updated guide to the reforms (June 2016)! Find out more about our new consultancy service: We can provide recommendations on how you can develop and implement effective strategies and then work with you to deliver them. Email us at apprenticeships@cityandguilds.com www.cityandguilds.com/apprenticeships
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