Like a child at Christmas, I excitedly woke up early to read through the apprenticeship levy funding guidance (don't judge me...keep reading). Of course it wasn't actually published until 9.36am, so I have consumed rather a lot of coffee this morning and my F5 (refresh) button has taken a bit of a battering.
For me, the real reason why today’s publication is so exciting is that it would reveal whether the government prioritised quality or quantity…and I am happy to announced that I think quality has prevailed!
Today’s blog takes the highlights from the announcement and offers our thoughts on what they mean for manufacturing and engineering.
The funding bands: quality not quantity prevails
This was the big one.
One of our major 6 red lines, and arguable most important, was that the amount that manufacturers could draw down from the levy fund reflection the true cost of training. The truth is currently, public funding for manufacturing and engineering apprenticeships barely scratch the surface.
There are 15 funding bands, ranging from £1,500 to £27,000 - accompanying the main document there are supplements outlining where apprenticeship frameworks and standards will fall into these bands.
On the whole, the provisional funding bands for manufacturing and engineering apprenticeships are a true and fair reflection of the cost of training. There remain a few apprenticeship standards that we would like to see knocked into a higher band and we’ll work with government, and supply evidence to argue that they deserve to be nudged up.
There was also an announcement that STEM apprenticeships would see an uplift in funding of 40% for Level 2 and 80% for Level 3.
The uplift in funding for STEM apprenticeships demonstrates our earlier point that currently the public funding available is a drop in the ocean compared to actual costs.
Without going into too much detail on today’s blog, the only downside is that the funding is based on the adult rate (19+) which we expect is to encourage more employers to choose new standards and where there aren’t new standards in place to get involved in Trailblazers.
Co-investment: putting hands in your pocket can drive quality
Manufacturers are used to putting their hands in their pockets - over two-thirds currently fund apprenticeships through a combination of public and private funding and almost a third pay for apprenticeship training entirely themselves. Today, the government announced what non-levy payers would be required to pay.
Non-levy payers would be required to co-invest at a rate of 10:90 - so 90% of their training costs covered, and 100% in you have less than 50 employees and recruit a 16 to 18 year old apprentice.
What this means is that a non-levy payer will need to pay their provider directly £1 and with that they apprenticeship training to the value £10 (because they get the government’s £9 as well).
The level announced today is both balanced and fair. Requiring employers not in scope of the levy to co-invest could help to improve the quality of apprenticeships as the employer will have a vested interest. And for the smallest of employees (less than 50 employees) that recruit an apprentice aged 16 to 19 years old, they get 100% of the training paid more.
Incentive payments for recruiting young people: a nice sweetener
Almost three-quarters of manufacturers tend to recruit apprentices aged between 16 and 18. With an ageing workforce, industry is keen to attract young fresh talent and apprenticeships are a perfect way of doing this.
Employers recruiting a 16 to 18 year old will receive £1000
This will be paid in two equal instalments at 3 and 12 months (so even if an engineering apprenticeship lasts 4 years you get the second instalment at 12 months and not at the end).
Why does the government tend to give a top up for recruiting younger apprentices? Well, recruiting young people can sometimes be seen as a little riskier so today’s announcement is actually a nice sweetener and will act as an added incentive.”
How the levy will operate across the UK: we don’t like the top-slice but at least there’s some flexibility to spend
Many manufacturers operate across the Scottish, Welsh and/or Northern Irish borders and those that do will immediately see a slice of their levy payments taken away making it impossible for them to get back what they put in. This is because while the levy is UK wide (employers pay 0.5% of their UK paybill) what they get back in vouchers is only the fraction of their paybill that equates to employees with an English postcode (this one is always quite difficult to get your head around!)
Employers will be able to use their vouchers on apprentices whose main place of work is in England.
The good news in today’s announcement is that employers will be able to fund apprentices based on their main place of work, as opposed to where they live. This will prevent them from being even further subjected to a cross-border penalty. So if your employee is mainly based in/on an English site then you can use your levy funds on their training – regardless of where they live.
Funding for higher, lower and equivalent level qualifications: beneficial to employers and learners alike
Today’s guidance gives quite a lot of flexibility for employers to use their vouchers on learners that have lower, higher or equivalent level qualifications.
Employers will be able to spend their vouchers on apprenticeship training even at a higher level than they already hold, including an apprenticeship. On top of that, government is proposing that an individual can be funded to undertake an apprenticeship at the same or lower level than they already hold, if it will allow the individual to acquire substantive new skills and the content of training is significantly different to prior training.
This is important, and beneficial, for employers and learners alike. Especially for learners who may be thinking about a career move, or more simply moving across an industry or sector and needs a different qualification.
It’s not unheard of in our industry to perhaps hold a Level 4 qualification in one discipline but then need to undertake a Level 3 in an engineering discipline, and we really need to open the talent pool as wide as possible with the skills shortages in our sector!
Voucher transferability: the trade-off between flexibility and complexity
We are a bit disappointed that the Government couldn’t make voucher transferability work in the first year. There is of course a trade-off to be had between the ability to spend vouchers more freely and being burdened with red tape. However, there has been some movement...
The government has proposed that up to 10% of vouchers will be transferable from 2018.
This will be particularly welcomed by larger organisations, who may want to use their vouchers in their supply chains, and companies of all sizes that choose to use Apprenticeship Training Agencies (ATAs). Under the ATA model, the ATA employs the apprentice on the employers’ behalf, but in the levy world an employer can only spend their vouchers on the apprentices they themselves employ.
Today’s publication is an informal consultation, as the elements we’ve outline above (and the various other aspects that we haven’t yet gone into detail on) are proposals. So we’ve got some room to manoeuvre, especially on those standards and frameworks we think need to be nudged up the funding bands. But on the whole, manufacturing and engineering has fared well and the funding at least will be a green light to the industry to train even more apprentices.
There also remains a few question marks over the system as a whole. We, and others, have called for a delay and today’s announcement, as generous as it may be in terms of funding, doesn’t take away from the fact that the levy is planned for 8 months’ time, it is a tax at a time of economic uncertainty in light of Brexit, and actually a delay could provide the government with just that bit more time to get this really working.