Funding rates cut by up to 50% for the most deprived 16-18 apprentices

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Proposed funding for 16 to 18 year-old apprentices will result in current rates to colleges and training providers being cut by around 30 per cent, rising to over half for those apprentices living in the most deprived areas of central London, FE Week can exclusively reveal.

Astonishingly, this compares with the funding for many learners aged 24 and over going up, particularly those living in affluent areas outside the South East and working for large employers. In one example, the proposed adult funding is nearly quadruple current levels.

The analysis for some of the most popular apprenticeship frameworks was conducted by FE Week. It is based on new proposed new ‘upper limit’ funding levels and a £1000 16 to 18 incentive paid to the provider, for apprenticeship framework starts from 1 May 2017 published by the Skills Funding Agency last Friday.

Levy-analysis-table-1

The level 2 in business administration has the highest volume of 16 to 18 starts according to government figures, and our analysis (click here) shows they face between 30 per cent (-£1,272) and 52% rate cut (£3,258). Yet an adult aged 24 or over at a large employer would be funded 34 per cent (+£506) more than their current levels.

The level 2 in construction framework has the second most 16 to 18-year-old starts so far this year, and our analysis (click here) shows they face between 27 per cent (-£2,574) and 50% rate cut (-£7,027). Yet an adult aged 24 or over at a large employer would be funded 124 per cent (+£3,322) more than their current levels.

The level 3 in ICT Practitioners is a popular framework across all ages, and in February the SFA said it was over-paying so reduced the funding levels (all other framework rates have stayed the same since 2012). Yet, last Friday this framework was classified as a STEM pathway so receives an 80 per cent uplift. As a result our analysis shows (click here) the 16-18 funding impact ranges from an 18 per cent increase (+1,529) to a 19 per cent cut (£2,410). However, the 24+ apprentice living in a non-deprived area and working at a large employer would see their funding rise £6,631 and almost quadruple from £2,369 to £9,000.

FE Week showed the analysis to Mark Dawe, chief executive of the Association of Employment and Learning Providers. He said: “Our member providers have also been running the numbers this week and they are very concerned at what they’re looking at.  For many popular sectors, the proposed rates will undermine the prime minister’s social mobility agenda.  In fact feedback suggests that large numbers of providers will withdraw provision altogether because the rates will not be viable not only in terms of basic delivery but for offering a good quality programme for the employer and the apprentice.  All the good work in establishing the apprenticeship brand will quickly become undone.

The cuts to 16 to 18 in deprived areas and rises to adults in wealthy areas come as result of the SFA seeking ‘simplification’. It proposes removing many of the long standing variables within the current funding methodology.

The proposed upper limits are based on a ‘historical volume weighted’ [see SFA explanation at end of article] mix of current 19 to 23 and 24+ adult funding rates, and take no account of: the current additional funding for 16 to 18 apprentices (more than double the current 19 to 23 adult rate); a disadvantage uplift for an apprentice living in a deprived area (up to 32 per cent more); a delivery in the south east (up to 20 per cent more in central London) and a reduction for working with large employers (25 per cent). The highest funding levels therefore currently go to 16-18 apprentices living and working in Tottenham, classified in the SFA methodology as the most deprived part of central London.

Mr Dawe added: “The apparent removal of the location element [disadvantage uplift] is particularly alarming – again, hardly helpful for the social mobility agenda.  We want apprenticeships to grow in all areas but there is an issue with urban youth which needs to tackled.  Providers are working very hard for example to encourage employers to take on more apprentices from BME backgrounds who are underrepresented on the programme and they will find it very difficult to maintain this effort if the rates are not revised.  Officials are stressing that the consultation is genuine however so we would urge providers and their employers to share their views with AELP and respond to the government consultation.”

FE Week also sought a reaction to the analysis from the SFA. This is what an SFA spokesperson said, in full: “In future we will be putting funding in the hands of employers and the system needs to be simple for them to navigate, choose the apprenticeship training they want to purchase and negotiate on price.  That means we have to simplify some of the complex funding arrangements that currently exist, while retaining the right incentives for high quality training.

“We know that taking on a younger person entails some extra cost to employers and providers and that’s why we propose to give them each a cash payment of £1,000 when they train a 16 to 18-year-old, or a 19 to 24-year-old care leaver or someone with an Education and Health Care Plan.  They will have freedom to use this money however they choose, for example to provide extra mentoring support in the first few months of the apprenticeship.

“In addition, for all STEM framework pathways we propose to increase the current government-funded adult rate by 40 per cent at Level 2 and 80 per cent at Level 3 and above, and then allocate these frameworks to the nearest funding band.  This uplift takes into account the fact that employers of these apprentices are currently disproportionately likely to be paying extra to providers on top of the funding provided by government.

“Over the course of the parliament, we will phase out the current apprenticeship frameworks so that all new apprentices undertake standards.  Standards are higher quality and more rigorous and so more expensive to deliver.  This is recognised in the current funding system and we will recognise it in the new system by allocating higher funding bands to apprenticeship standards.

“We will engage with employers and providers over coming weeks and conduct further research to establish whether this proposal provides an appropriate level of support for younger apprentices.  We particularly welcome evidence-based feedback from employers and providers on the investment they currently make in supporting younger apprentices.”

Nick Linford is editor of FE Week and author of the Complete Guide to Apprenticeship Funding.


The SFA supplied FE Week with a more detailed explanation than in their document concerning how they assigned the upper limits to apprenticeship framework pathways. They said: “In the calculation we take into account co-funding for both 19-23 and 24+; this means the rates are 50% of the overall published rate for 19-23 and 40% of the published rate for 24+. We weight the rates according to the volumes of 19-23 and 24+ starts; therefore in framework pathways where there are 24+ starts the calculated rates will be lower than the 50% in the example. We also assign the pathway to the closest band, not the next band above the rate. For example; a calculated rate of £1,700 is assigned  to the £1,500 band but a rate of £1,800 is assigned to the £2,000 band.”



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16 Comments

  1. Simeon Baker

    This is completely bizarre

    “The cuts to 16 to 18 in deprived areas and rises to adults in wealthy areas come as result of the SFA seeking ‘simplification’. It proposes removing many of the long standing variables within the current funding methodology.”

    Someone please tell me this is a mathematical error and not our government systematically stealing from the poor and giving to the rich!?

  2. On the other hand, those shaken out of the labour market in the last recession and probably under-employed now, are currently aged 24+ in insecure employment. If employers are incentivised to take these young people, is that not social mobility? Ward analysis shows plenty of pockets of deprivation in affluent areas – even Surrey has three in the most deprived quintile.

  3. Andy Forbes

    Yes, we’ve just been analyzing the impact on young apprentices here in Tottenham (and indeed Enfield) and this will devastate our provision, especially in high-tech areas like Engineering, IT and Construction.The sweeping cuts in funding, plus the proposal of a flat rate extra payment of £1000 for 16-18 year old apprentices will make it more attractive from a funding point of view to offer young people low band frameworks like Cleaning, Business Admin and Customer Service, rather than high band frameworks like Engineering, Digital and Construction. For Cleaning, for example, the extra £1000 gives us 67% more funding, while for Advanced Electrical Installation, the extra £1000 represents just 8% extra.

    So the new proposals will make it far less attractive to recruit young apprentices and give us financial incentives to put young people on low cost training, rather than expensive technical training.

    This is surely not what the government intended when it introduced the new apprenticeship levy system. The proposals are out for consultation, so I can only hope the Department for Education listens to reason when they realise what they’ve done.

  4. I’ve just run our numbers. If these proposals had been in force in 15/16 our total income would have been 19% lower but the 16-18 income would have been a massive 45% lower.

    What to do? I don’t think the government really wants to end 16-18 apprenticeships, which will be the effect of these proposals. I can’t see them rowing back on simplification (nor should they). Equally trebling the £1000 payment would make a nonsense of the idea that it reflects the extra cost of setting up a 16-18 year old apprenticeship, rather than a political incentive. Our consultation response will be recommending that where the learner is 16-18 the cap should be set one band higher than would otherwise be the case. Any support for this, people?

  5. Anna Byers

    As a micro provider of a niche Apprenticeship this funding proposal removes all ability to offer a funded, high quality learning experience for young people entering a professional career. The professional exams and the preparation/teaching for these alone will require the funding rate as described – 50% of the 19-23 year old rate. The token gesture of £1000 additional for a young learner will be a drop in the ocean. This will prevent very small and small training providers offering carefully considered and robust programmes.
    I refer to the Level 3 framework in Procurement and supply, soon to be closed off by the SFA – before it had a chance to establish itself within the panoply of options. The candidates currently going through the programme are a testament to why thorough, programmes with professional endorsement (think finance sector) are a first rate place for young school and college leavers to begin their careers. Not only do they learn about being part of the world of work, they also begin to build their body of profession knowledge and skills which will serve them and their employers in the future.
    Shame on the policy makers and number crunchers in this world, some decisions need more thought than ‘computer says no’.
    Yours in deep disappointment, Anna Byers

  6. The issue of how young people, adults (including parents, teachers and employers) will learn more about apprenticeship opportunities and their added-value compared to other options remains a mystery. Careers provision in England is in a complete mess as robust evidence continues to be ignored on the negative effects this is having on social mobility and equality of opportunity. See: http://www2.warwick.ac.uk/fac/soc/ier/people/dhughes/final_careers_education_literature_review_1.pdf and https://www2.warwick.ac.uk/fac/soc/ier/research/adult_education/adult_education_too_important_to_be_left_summary3.pdf

  7. I can only offer an analogy. The chief of the Science For Automobiles has proposed we need to simplify the production of cars. Customers just want to be able to drive. All of the variables calculated by the ECU for steering assist, traction control and anti-lock braking just over-complicates the whole process of driving. Let’s get some of these new cars on the road and just see what happens.

  8. As a training provider for engineering apprenticeships we have just completed an analysis of these funding changes for our 16-18 year old Level 3 engineering apprenticeships. These funding changes will result in a dramatic drop from the current £15K total funding per apprentice down to a cap band of £9K total per apprentice. We deliver a normal BTEC Diploma/NVQ Diploma mix over 42 months for employers who are predominantly SMEs. As for the comments about frameworks being replaced by standards there are still many current engineering pathways that do not yet have an equivalent standard, either in development or ready for delivery. Plus some standards that are classed as ready for delivery contain qualifications that are still in development so are not actually ready for delivery.

    • Totally agree with Geoff the new Engineering standards are not ready to roll out as there is no base to role them onto, we should be looking at how we can improve apprenticeships not how we can make them cheaper, its very short term thinking.

    • I’m not entirely sure why anyone is surprised by this fiasco. How many times have we had changes which are ill thought through, appear to have been designed by people who are completely clueless and which give entirely the wrong answer to the question that has been posed? There is a theme here which is that those in charge couldn’t run a bath let alone a department. Hopeless, inept and gormless (and that’s on a good day)

    • That’s ok. Government have got this covered by also bringing in a minimum amount required in terms of employer contribution (10% of the lowest band, so £100). Obviously this is part of a carefully considered strategy to put employers in the driving seat by encouraging them to pay very little for provision which is regulated by a host of rules including minimum durations and very high expectations for the outcomes of Standards. Pay peanuts and get….

      Possibly, it’s part of a plan to asset strip framework delivery. There’s only so much money in the pot and Govt has to find the cash to pay for Standards from somewhere (when they finally get signed off and meet the meet the needs of the majority of employers, especially SMEs).

      Or, it is just bonkers and the whole thing has been dreamt up by a bunch of inepts who have no real comprehension of the impact their decision making will have on the ground. I read somewhere that a minimum payment requirement had been introduced to stop a race to the bottom. It’s already happened and the latest ‘proposal’ just adds fuel to the fire.

      Government + apprenticeships planning = oxymoron.

  9. Does anyone believe that government / SFA are genuinely interested in what we as providers actually think?
    The whole thing is going to hell in a hand cart the ways things are shaping. They say it is all about employer ownership of skills and get they are taking away the existing frameworks – many of which are really fit for purpose and employers understand – and replacing them with Standards that are not fit for purpose for many employers. The Standards are not ready to use and a delivery plan / apprenticeship framework still has to be developed. By whom? Small training providers will not have the resources to do. How is the ‘quality’ of that framework to be measured / benchmarked against another? There will be no value in Standards to employees, new apprentices and to the majority of employers as they will ‘not mean anything’. Fine if you are JLR or BMW etc but for most the Standards will have no CV value and very limited value to the employer unless bespoke to their needs. Who will design it for me? The whole ‘competitive’ funding and pricing will undermine the value added from many providers and provision will be cut to the bone. The race to the bottom will be unavoidable. Whilst we still feel we can add value in our specialist sector, water, we are now wondering whether the delivery of the ‘generic frameworks’ is at all sustainable beyond next April. Our free recruitment service to employers for 16-18 apprentices will have to cease and while we are not large that’s a couple of hundred young people a year we won’t be finding jobs for. How can anyone plan for a business and re-assure staff and assessors that there is a future? Standards can be made to work and be a benefit to large employers. Take away the SASE frameworks [and current funding – its not broke] and apprenticeship starts will plummet and with it the country’s delivery capacity which will be impossible to recover as and when reality in policy making dawns and a reverse to status quo is attemped. I just hope the new minister will not simply follow prior BIS policies and will listen to and consult with the coal face.

  10. Malcolm Armstrong

    The more I think of this the more I feel they are hitting the framework funding hard because they are concerned about the slow take up of standards. Funding bands for comparable standards don’t seem too bad (or is it just the few I have looked at) but £2000 for the AAT Advanced framework or £2500 for the Management or AAT Higher Apprenticeships can’t be done. We deliver these successfully at the moment, but only with significant employer contributions for older learners. They think by paying such low amounts for frameworks providers will be forced to take up new standards. We’d gladly move across to standards if they were available, if they had assessment plans in place, if we trusted them to be attractive or thought they were deliverable. How many will be available and tested by April / May next year?

  11. Richarde Brooks

    The simplification of the funding system so that employers could understand it should be irrelevant. The idea promoted by the SFA was that an employer could approach different training providers and ask them for a price to deliver the Apprenticeship. We understand the funding and could therefore provide prices very easily that the employers can then compare them. For example I have absolutely no idea how Tesco’s and Sainsbury’s arrive at a price for a tin of baked beans and why should I need to? I just choose which one I want based on Quality and Price.