Apprenticeship Funding Reform The Basics! · Apprenticeship Levy The basics • The levy will be...
Transcript of Apprenticeship Funding Reform The Basics! · Apprenticeship Levy The basics • The levy will be...
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Apprenticeship Funding Reform – The Basics!
Gareth Jones Apprenticeship Strategy Manager
GMLPF [email protected] @gmlpfapps
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Webinar will cover:
1. Apprenticeship Levy
2. Apprenticeship Funding for Non-Levy Payers
3. Co-Investment & Additional Payments
4. Apprenticeship Funding Bands
5. Digital Apprenticeship Service
6. Register of Apprenticeship Training Providers
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https://www.gov.uk/government/publications/apprenticeship-levy-how-it-will-work/apprenticeship-levy-how-it-will-work
Apprenticeship Reform update: A set of Proposals!
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Apprenticeship Levy The basics
• The levy will be 0.5% of pay bill, to be paid monthly alongside usual PAYE payment and applies to all UK based businesses
• Will raise approx. £2.7bn per annum across UK
• Every employer gets an allowance of £15,000 per year
• £1250 per month, unused allowance carried forward one month to next
• Effectively means, Levy only paid on pay bill in excess of £3m
• (0.5% x £3m = £15,000)
• Levy paid into a digital account on the new Digital Apprenticeship Service
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Apprenticeship Levy The basics
• Employers will be able to get out more than they pay into the levy – via an automatic 10% top-up to their account
• Levy will be collected from April 2017
– Via PAYE system and paid to HMRC monthly in arrears as per PAYE payments
• Levy funds will expire 18 months after they have been credited to employers DAS account – payments taken on 1st in, 1st out basis
• New Funding systems implemented 1st May 2017
• Apprenticeship Levy can only be used to pay for training and assessment for apprentices in England
• Apprentices starting their Apprenticeship prior to the end of April 2017 will continue to have their programmes funded under current system.
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Apprenticeship Levy What does it mean in real terms?
• Levy affects approx. 2% of UK employers
• Approx. 19,000 employers
• Examples:
– Civil Service
• Annual Salary Cost £11.13bn (source: National Audit Office – Central Government staff costs)
• Approximate Levy sum: 0.5% x £11,13bn = £55,650,000
– Liverpool City Region
• Approx. 400+ employers will pay Levy
• Approx. Levy contribution by LCR employers = £30m+
• Employers with pay bill over £2.8m will have to report to HMRC in case they go over threshold during the year, even if they don’t pay the Levy
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Apprenticeship Levy Examples of what employers may pay?
Example 1: an employer who would pay the levy
An employer with an annual pay bill of £5,000,000:
Levy sum: 0.5% x £5,000,000 = £25,000
Subtracting levy allowance: £25,000 - £15,000 = £10,000 annual levy payment
Example 2: an employer who would not have to pay the levy
An employer with an annual pay bill of £2,000,000:
Levy sum: 0.5% x £2,000,000 = £10,000
Subtracting levy allowance: £10,000 - £15,000 = £0 annual levy payment
• New indicative online tool for employers to estimate levy contributions and begin to plan their training requirements and financial spending
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Non-Levy paying Employers
• Those with pay bill of less than £3,000,000
• 98% of employers
• Will be expected to make contribution towards cost of training (co-investment) and Government will pay the rest
• Must be cash, cannot be in-kind payments
• Each Apprenticeship Framework and standard has been allocated to a new funding band
• They will not use DAS until at least 2018
• Expectation that all employers will use DAS by 2020
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Co-Investment
• Employers will pay their providers the agreed co-investment direct and over the life of the apprenticeship
• Proposed co-investment rate
– 10% Employer
– 90% Government
• No longer having rates based on age of apprentice at the start of the programme(16-18, 19-24, 25+, etc.)
• Co-investment also applies to those Levy-paying employers who have used all their Levy contributions and wish to purchase more apprenticeship training
• There will be additional payments available to both employers and providers
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Additional Payments
Training younger apprentices
• Extra support for those employing 16-18 year old – £1000 for both employers and providers
– Payments made at 3 and 6 months direct to training provider
• Proposal for employers with fewer than 50 people, 16-18 year olds will be trained at no cost – i.e. 100% Government funding
Support for care leavers and those with Education, Health and Care plan
• For those aged 19-24 who have been in care or have EHC plan, both employers and providers will receive £1000.
• Government pays 100% of training costs for these individuals
NOTE: Currently no additional support for those aged 16-18 care leavers or those with EHC other than the standard £1000
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Additional Payments
English & Maths
• Where English & Maths required:
– Provider will claim flat rate of £471 for each qualification from Government
– This does not come from employers levy contributions
Learner Support
• Apprentices with a learning or physical difficulty may require extra learning support that can involve additional costs
• Government will fund up to an additional £150 per month direct to provider
Both a continuation of the current system
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Equivalent or Lower Level Apprenticeships
• Current rules complex
• Simplify rules so employers can apply them to their own existing workforce
• New proposal is that Levy or co-investing employer can support to train eligible individual to undertake an apprentice at a higher level than a qualification they already hold
• Also propose that an individual can be funded to undertake an apprenticeship at the same or lower level than a qualification they already hold if the apprenticeship allows them to acquire substantive new skills and the content of the training is materially different from any prior training
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Use of Levy Funds for another Employer
• Main aim of Levy is to support employers in growing the quality and number of apprenticeship in own workforce
• Government recognises employers want to support their supply chain or other employers in their sector or community
• From 2018, proposing to be able to transfer 10% of Levy funds to another employer
• This includes those employers who use ATAs
• Means in 1st year of Levy employers can only use Levy on own workforce
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Apprenticeship Funding Bands
• Currently two different funding systems, one for framework and one for standards
• Simplified into one new system - 15 new funding bandings
• Upper limit those bands ranging from £1500 to £27000
• All existing and new apprenticeship frameworks and standards will be placed within one of these bands
• STEM subjects will get an uplift and placed in higher bands (L2 – 40%, L3 – 80%)
• Upper limit is – the max amount of the levy paying employers can use towards an apprenticeship
– the max amount the Government will co-invest to none levy-payers
• Framework pathways to be allocated into nearest funding based on the current rate of funding Government pays for training adult (19+) apprentices
• 20% Completion Payment retained for all delivery, NOTE: not an achievement payment!
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Apprenticeship Funding Bands
• Funding for Apprenticeship Standards is far more than for older Frameworks? E.g.’s – Motor Vehicle L3 – Light vehicle
• Framework £5000 max funding band • Standard £18,000 max funding band
• Government pushing Providers to deliver more standards where more funding
exists?
• More costly End Point Assessment means standards might not be as attractive
• More costly to employers – 10% contribution more if funding value is more
• Simply not enough standards currently available – Standards = 145 – Frameworks = 203 – with multiple pathways and levels nearer 1000 options
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Apprenticeship Funding Bands - Examples
Business Administration – Level 2 • Max Funding 2017/18 = £2000 (+£1000 16-18, £942 English & Maths) • Comparison - 2015/16 rates:
• 16-18 = £5437 - 17/18 down at least £1495 • 19-24 = £2888 - 17/18 up £54 • 25+ = £2350 - 17/18 up £632
Health & Social Care – Level 3 • Max Funding 2017/18 = £2000 (+£1000 16-18, £942 English & Maths) • Comparison - 2015/16 rates:
• 16-18 = £6379 - 17/18 down at least £2437 • 19-24 = £3259 - 17/18 down at least £317 • 25+ = £2607 - 17/18 up £334
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/545340/Apprenticeship_funding_bands_tool_-_Aug_2016.xlsm
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Digital Apprenticeship Service
• Help employers regardless of whether they pay levy or not:
– Select an Apprenticeship Framework or Standard
– Choose the training provider or providers they want to deliver training
– Choose an Assessment Organisation (Apprenticeship Standards only)
– Post Apprenticeship Vacancies
• From May 2017, levy payers will be able to: – See the funds they have available to spend in England
– Set the price for training agreed with the training provider
– Pay for apprenticeship training and assessment electronically to providers
• Levy payers will be able to register for DAS account Jan 2017
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Register of Apprenticeship Training Providers (RoATP)
• Employers can only spend the funds in your digital account or access government support for apprenticeship training delivered by an approved training provider.
• New Register of Apprenticeship Training Providers (RoATP)
• All providers wanting a role in delivering apprenticeship training from May
2017 must apply
• No transfer from existing ROTO as it is completely separate
• Only for those who deliver training, not for managing agents, intermediaries, etc.
• Alongside application process, new procurement exercise will run for delivery of apprenticeships to non-levied employers with contracts to be awarded to successful providers
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Register of Apprenticeship Training Providers (RoATP)
• Expectation that main provider will deliver more than half of each apprentice training
• Three routes for application • Main • Supporting • Employer Provider
• Will look at three tests:
• Due Diligence • Financial Health • Quality, capacity and capability
• Must pass all three to be on register
• Register will open in October 2016 for applications
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Next Steps
Government has said further info to be published: • October 2016 – final levels of funding, government support,
additional payments
• December 2016 – further guidance from HMRC on how to calculate and pay the Levy
HMRC currently consulting on how employers: • Calculate Levy • Report Levy • Pay Levy
All part of draft Finance Act 2016 – see link for more detail http://www.legislation.gov.uk/ukpga/2016/24/pdfs/ukpga_20160024_en.pdf
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GMLPF Support & Available Resources
• GMLPF Leaflets
– Levy paying Employer
– Non-Levy paying employer
• Infographic for use electronically by members e.g. social media
• Future Apprenticeship Programme
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Questions?
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Next webinar
2nd November 2016 – 10.30am
Register of Apprenticeship Training Providers
https://attendee.gotowebinar.com/register/1160475526753835777
Gareth Jones