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NELP AGM – AELP Update October 2019

Explore the current state of the UK Apprenticeship System with funding flow insights, sustainability concerns, policy positions, and transition challenges.

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NELP AGM – AELP Update October 2019

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  1. NELP AGM – AELP Update October 2019 Presenter: Simon Ashworth Chief Policy Officer Association of Employment & Learning Providers (AELP) @AELPUK & @sashworth80

  2. c£500m passed to devolved nations Apprenticeship Funding • How the system works and funding flow: c£2bn to levy paying employers of which 50% expected to go unspent c£2.5bn collected per annum through the levy Incentives Functional Skills other payments Whatever is left i.e. expired levy funding then funds non-levy i.e. government co-investment subsidy Assumption was 50% = £1bn per annum Roughly equates to £83m per month of funding being sunsetted from levy accounts

  3. Apprenticeship Funding • But is the overall apprenticeship system running out of money… Lots of confusing messages. Fact or Fiction?

  4. Apprenticeship Programme Affordability • National Audit Office (NAO) Report into Apprenticeship Programme Progress: • 2017-2018: Levy payers only accessed c9% of funds, compared to government forecast of 13% • The programme was underspent by around £500m in 2017-2018 and 2018-2019. • Forecasts projected that 2019-2020 spending will be on budget at £2.6bn. • Public Accounts Committee (PAC) Inquiry March 2019 into the NAO report: • Levy payers now spending nearer 60% of the levy i.e. a proportion that threatens to ‘break’ the funding model. • Jonathan Slater: “levy payer are spending 60% rather than 50%, leaving less than previously for non-levy payers… why aren’t we giving more funding to non-levy payers – because its being spent by levy payers…. For 2021, we will have some hard choices to make”

  5. Apprenticeship Programme Sustainability • Why is the system running out of money? • On average standards cost double what DfE forecasted across all levels • Flawed pricing negotiation assumption – i.e. little negotiated price. DfE expected c75% discount per start • Big growth in more costly L4+ programmes including degree apprenticeships • Higher level programmes are longer and this commits funding for longer future periods i.e. longer ring-fenced commitments. • Potentially a £500m+ overspend – 25% of the current budget!

  6. Apprenticeships • How might the system change and what about those hard choices? • Further new investment • Alternative funding arrangements • Artificially dampen demand

  7. Apprenticeships • Further new investment • Expand the levy – levy payers pay more • Extend the levy – more employers pay in • Alternative funding arrangements • Funding level 6 and level 7 from the HE budget • Return the £1bn government contribution that was in place pre-levy • Fund 16-18 apprenticeships separately through legal entitlement

  8. Apprenticeships • Artificially damped demand • Increase the co-investment requirement • Reduce the current 110% commitment to levy paying employers • Move popular standards into lower funding bands • Introduce or reintroduce new eligibility requirements: • Wage / salary thresholds • Prior attainment limitation • Limiting by age • Limiting by programme level • Previous Skills Minister Anne Milton was clear she wanted and “all age, all level” apprenticeship programme. But what will Gavin Williamson or a future incumbent ultimately decide…. ?

  9. AELP Policy Position on Apprenticeship System • The levy is a gaming changing opportunity – the levy itself has been a success. • It’s the on-the-job which makes apprenticeship unique • Sustainable employer-led system which is free from institutional bias. • Legal entitlement for young people, more focus, but not at detriment to older workers • L6-L7 should be included for employers, but funded through HE budget to ensure affordability and long term sustainability of the apprenticeship system • Low level does not mean low quality • More focus and commitment to SMEs including a guaranteed non-levy budget. • Fair funding for functional skills • Clear accountability and oversight in the system

  10. Non-Levy Apprenticeship Transition Journey • Non-levy apprenticeship procurement – results December 2017 • Initial indication that small employers would move to The Apprentice Service (TAS) April 2019 – 18 month direct contracting window. • New subcontracting rules introduced from January 2018 - requirement main providers have “some involvement in the apprentices training and/or on-programme assessment.” • ESFA then said that was too soon and extended the current contracts through until March 2020, but flat line contracts with no growth opportunity. • Piloted TAS for non-levy payers from August 2019-December 2020, but only for providers with a direct contract and with headroom for new starts. • ESFA recently concluded 4 regional roadshows for providers as part of the information sharing / gathering in preparing for that transition. ESFA planning to move to TAS in “2020”, but frustratingly no specific commitment.

  11. Non-Levy Apprenticeship Transition Challenges • Lack of clarity on exact timelines in 2020 • Transitioning small employers to use The Apprenticeship Service • Extra administrative burden on providers • How will the ESFA manage the budget once contracts go? • Reserve funding methodology • Lack of …and diminishing availability of non-levy funding only going to get worse unless there is intervention. • Simply opening the market to double the number of providers with no extra funding is irrational… Need more funding and certainty for non-levy – reinstate previous £1bn investment and ring fence it. • ESFA track record on procurement fairly disastrous - could flexible Provider Earnings Limits (PEL) be used as a way control the non-levy budget?

  12. Education Inspection Framework - & feedback from Ofsted • Education Inspection Framework (EIF) now replaced the CIF. • Role of the Nominee has now changed • Understanding the Deep Dive • Curriculum and Curriculum Sequencing • Data not as important, but still important – progression and destination • Self Assessment Reporting (SAR) and Quality Improvement Planning (QIP) • Short inspections recommencing from November 2019 – if last inspection was 2015 or earlier you will be in scope. • Lot of activity to support the sector: • 4 EIF regional workshops, supported by HMIs • Webinar with Chris Jones on the EIF • Disseminating the Chief Inspectors Report Conference 12th December 2019

  13. Adult Skills and National Retraining Scheme • No growth again on adult skills budget – 103% commitment continues as does full funding for those on a low wage. • National Adult Education Budget contracts due to lapse in July 2020. Extend or procure? • Traineeships only area where growing forthcoming – initial 110% commitment of allocation, plus two in-year growth points. • Future new digital skills legal entitlement for August 2020 through AEB. • Implementation of the National Retraining Scheme (NRS) now underway – aimed at employed adults (24+) education below degree level. • More investment is needed for adult education - 6 million adults have low levels of basic skills with a further 9 million adults who do not hold a level 2 qualification and the full AEB should be put out to procurement. • Absolute need for the National Retraining Scheme and the new digital skills, although need actual participation funding.

  14. Devolution of Skills • Devolution of ESFA Funds to Mayoral Combined Authorities/devolved authorities: • Tees Valley • Liverpool City Region • Greater Manchester • West Midlands • Cambridge and Peterborough • West of England • Greater London • North Tyneside – Wave 2 • Sheffield City Region – Wave 2 PositivesChallenges - Reduction in grants, procuring more provision - Issues with procurement process & outcomes - Capping of subcontracting fees - Tough for national providers - Growing political influence attracting new money - Year 2 different rules and systems coming - Influencing wider programmes e.g. levy transfer • Supporting the further devolution of the adult skills budget. AELP believes that the devolution of the adult skills budget offers a significant opportunity for independent training providers to gain fairer direct access to the market.

  15. Finally Other Hot Topics • Expecting a full 3 year zero based Spending Review in 2020. • New subcontracting review being undertaken by DfE/ESFA • Functional Skills Reform and issues with Invigilation and availability of assessments • T-Levels commence 2020 onwards

  16. Questions Simon Ashworth AELP Chief Policy Officer @AELPUK @sashworth80 sashworth@aelp.org.uk

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