SFA apprenticeship funding rules strengthened to deter employer kick-backs

SFA apprenticeship funding rules strengthened to deter employer kick-backs

The apprenticeship funding rules, which come into force from May, have now been updated by the SFA to deter employer kick-backs.

In early March the SFA expressed concern over “emerging delivery models that are contrary to the policy intent.

“For example, some providers are offering incentives for employers by paying or re-funding them for certain aspects. These include:

  • inflating training costs to refund the employer’s co-investment
  • funding ineligible costs to employers as subcontractors
  • claiming higher prices to fund non-English apprentices free of charge to the employer

“Providers must not make payments of this kind to employers.”

Now, an additional paragraph has been added to version 2 of the rules, published 17 March, which for providers reads:

“P85. You must not pay incentives or inducements or any other payment not authorised by us to the employer in relation to any part of the apprenticeship programme.”

And a later section adds: “P172. You must not return, in total or in part, the employer’s contribution once the co-investment has been collected.”

But is there a risk a separate rule (P151) provides for a loop-hole?

However, payments to employers have not been completely ruled out, which risks being exploited as a loop-hole.

In a section titled: “special conditions for subcontracting to organisations not on the register of apprenticeship training providers” a new rule has been added which tells the provider: “P151. Where the employer is the delivery subcontractor they must report the actual costs of delivery” and tells the employer: “where you are the delivery subcontractor you must only report actual costs of delivery to the provider.”

The SFA has said that this is a “clarification that where the employer is the delivery subcontractor they must charge for actual costs in the same way as employer-providers.”

There is also a new rule for providers stating they “P160. We will only pay for commitments made with an employer on the apprenticeship service where the employer is expecting to pay the apprenticeship levy in that financial year.”

The SFA add in their change document that providers “should not enter into commitments on the apprenticeship service with employers who have no prospect of paying the levy.”

The latest version of the funding rules also removes the requirement for Early Years Education apprentices to study GCSE maths and English, a government u-turn that was reported in FE Week.

And there appears to be a change of heart on the maximum cost of the end-point assessment, following reporting of the issue in FE Week. The wording has been changed from “20% of the total agreed price” to “20% of the funding band maximum.” The SFA has said the rule was amended “to allow greater flexibility, where appropriate, in the end point assessment cost.”

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Other changes in version 2 of the provider funding rules. Bold added to highlight change.

Version 1: P32.4.3  “Off-the-job training does not include training which takes place outside the apprentice’s normal working hours (this cannot count towards the 20% off-the-job training)

Version 2: P32.4.3 “Off-the-job training does not include training which takes place outside the apprentice’s paid working hours.”


Version 1: P39 “The minimum duration of an apprenticeship is one year unless the framework or standard specification or assessment plan requires it to be longer.”

Version 2: P39 “The minimum duration for apprenticeship training is one year unless the framework or standard specification or assessment plan requires it to be longer.”


Version 1: P54.3 “To use funds in the employer’s digital account or government-employer co-investment, the individual must not be enrolled on another apprenticeship at the same time as any new apprenticeship they start.”

Version 2: P54.3 “To use funds in the employer’s digital account or government-employer co-investment, the individual must not be enrolled on another apprenticeship, or another DfE funded FE/HE programme, at the same time as any new apprenticeship they start.”


Version 1: P79.1 “Funds from an employer’s digital account or government-employer co-investment must only be used for activity directly related to the apprenticeship. These funds must only be used to pay for training and assessment, including end-point assessment, to attain an apprenticeship that is eligible for funding up to the limit of the funding band. This includes Off-the-job training, including the costs associated with mandatory qualifications, through an externally-contracted provider or evidenced costs for employer-provider delivery.”

Version 1: P79.1 & P79.2 “Funds from an employer’s digital account, government-employer co-investment or the additional transitional funds paid for 16 to 18 year olds on frameworks must only be used for activity directly related to the apprenticeship. These funds must only be used to pay for training and assessment, including end-point assessment, to attain an apprenticeship that is eligible for funding up to the limit of the funding band. This includes off-the-job training through an externally-contracted provider or evidenced costs for employer-provider delivery. This could include some or all of the training aspects of a licence to practise or non-mandatory qualification. In both cases there must be a clear overlap between this training and the knowledge, skills and behaviors needed for the apprenticeship standard. [it also includes] Registration and examination (including certification) costs associated with mandatory qualifications excluding any licence to practise (see paragraph P82.7).”


Version 1: P82.6 “Funds in an employer’s digital account or government-employer co-investment must not be used for any training, optional modules, educational trips or trips to professional events in excess of those required need to achieve the apprenticeship framework or meet the knowledge, skills and behaviours of the apprenticeship standard.”

Version 2: P82.6 “Funds in an employer’s digital account or government-employer co-investment must not be used for any training, optional modules, educational trips or trips to professional events in excess of those required to achieve the apprenticeship framework or meet the knowledge, skills and behaviours of the apprenticeship standard. This includes training solely and specifically required for a licence to practise.


Version 1: P82.7 “Funds in an employer’s digital account or government-employer co-investment must not be used for any training, assessment, exams or tests in any skills and knowledge solely and specifically required to acquire licences to practise, or the certification of any licence to practise, where it is a legal (or statutory) requirement for all practitioners to obtain a licence which confirms the licence-holder meets prescribed standards of competence, including situations in which it is unlawful to carry out a specified range of activities for pay without first having obtained a licence. This applies even where such a licence is required in the apprenticeship standard and the assessment plan.”

Version 2: P82.7 (reference to training removed) “Funds in an employer’s digital account or government-employer co-investment must not be used for any registration and examination (including certification) costs associated with a licence to practise. This applies even where a licence is specified in the apprenticeship standard and assessment plan.”


Version 1: P82.17 “Funds in an employer’s digital account or government-employer co-investment must not be used for any specific services not related to the delivery and administration of the apprenticeship. This includes the recruitment and continuing professional development of staff involved in apprenticeships, company inductions, managing agents and those providing a brokerage service to an employer.”

Version 2: P82.17 “Funds in an employer’s digital account or government-employer co-investment must not be used for any specific services not related to the delivery and administration of the apprenticeship. This includes the recruitment and continuing professional development of staff involved in apprenticeships, company inductions, managing agents and those providing a brokerage service to an employer or provider.


Version 1: P114 “You must contract with the apprentice assessment organisation that has been selected by the employer. You must have a written agreement in place with this assessment organisation and make payment to them for conducting the end-point assessment. The written agreement must set out the arrangements for end-point assessment, including arrangements for any re-takes and payments.”

Version 2: P115 “You must contract with the apprentice assessment organisation that has been selected by the employer and have a written agreement in place. This allows you, on behalf of the employer, to make payment to them for conducting the end-point assessment. The written agreement must set out the arrangements for sharing relevant information about the apprentice so end-point assessment and certification can take place, including arrangements for any re-takes and payments.”


Version 1: P116 “Costs of end-point assessment will vary but we expect that it should not usually be more than 20% of the total agreed price for delivering the apprenticeship training and assessment.”

 Version 2: P117 “We expect that the cost of end-point assessment should not usually exceed 20% of the funding band maximum. This does not mean that end-point assessment must cost 20%; the cost that individual employers will pay for assessment varies between standards and we expect we expect employers to negotiate with assessment organisations to secure value for money. Where total costs are higher than the funding band maximum the difference must be paid by the employer.”


New rule: P186. Providers must “offer the employer the option of using the recruit an apprentice service for all new recruits.” and “where you advertise on behalf of the employer you must make it clear in the advert how many hours will be expected and this must meet the minimum duration requirements”


Version 1: P196.3 “Where apprentices are made redundant, you must record apprentices more than six months from their planned end-date as having left learning if a new employer is not found within 12 weeks.”

Version 2: P200.3 “Where apprentices are made redundant, you must record apprentices more than six months from their planned end-date as having left learning if a new employer is not found within 12 weeks of their contract end date.