The Confederation of British Industry (CBI) has warned government plans for a 10 per cent top-up to monthly levy contributions will only benefit a small minority of employers.

The top-up plans were unveiled in a budget report published by the Treasury after George Osborne finished his speech to MPs on March 16.

It will mean, for example, if an employer pays a £2,000 levy, then its levy pot will be £2,200.

The CBI director for employment and skills, Neil Carberry told FE Week: “Extra investment for apprenticeships will only help the small minority for firms who will be able to spend their whole levy.”

He added: “Businesses remain concerned that only a year away from the introduction of the levy, there is little clarity about how the system will work beyond the fact it will make taking on apprentices more expensive.

“As a result many businesses are in the difficult position of having to reduce overall training or apprenticeship numbers to pay their levy.”

Stewart Segal, the chief executive of the Association of Employment and Learning Providers, was also cautious.

He said: “We will need to understand how exactly the top-up will work and in particular how it will work for those only paying a small levy.”

The budget report stated: “From April 2017, employers will receive a 10 per cent top-up to their monthly levy contributions in England and this will be available for them to spend on apprenticeship training through their digital account.

“The government will set out further details on the operating model in April and draft funding rates will be published in June.”

The new measure comes in addition to the £15,000 allowance previously announced for levy payers, which means it will only apply to large employers.

However, Skills Minister Nick Boles has reassured smaller employers some levy cash will be recycled for them.

The Treasury said in its budget report that the levy “will be set at a rate of 0.5 per cent of an employer’s paybill and will be paid through PAYE”.

“Each employer will receive an allowance of £15,000 to offset against their levy payment,” it said.

“The government will apply a 10 per cent top-up to monthly funds entering apprenticeship levy payers’ digital accounts in England from April 2017.”

It comes after FE Week revealed on the morning of the budget that extra money is likely to be made available for 16 to 18 apprenticeships.

The Skills Funding Agency subsequently announced that it would fully fund all “high quality” 16 to 18 apprenticeships from August 2015 to March 2016.

It said: “We will fully fund all high quality 16 to 18 apprenticeship and SFA-funded 16 to 18 traineeship delivery from August 2015 to March 2016.

Mr Segal said: “We’re pleased the SFA has addressed some of the growth cases for apprenticeships and traineeships put forward by providers, but this late notification will inevitably mean that some provision will be affected.”

This year’s Annual Apprenticeship Conference (AAC), held at Birmingham’s International Convention Centre from March 16 to 18, featured an action packed agenda. FE Week went to press onsite at the end of the second day, so what follows is a roundup of the first two days’ highlights.

David Hill, the most senior civil servant working on the apprenticeship reforms, kicked off the event. He gave an overview of the reform programme, in his first speech since being appointed Director of Apprenticeships at the Department for Education and Department for Business, Innovation and Skills (BIS) in October.

Keith Smith, whose new role as head of the levy implementation team at BIS was announced last week, later gave more detail on how the new levy-funded system would work through the Digital Apprenticeship Service (DAS).

The DAS, which should be fully operational by January next year, will “change how you do business”, Mr Smith said, with providers contracting directly with employers and no longer able to rely on the Skills Funding Agency (SFA) to give them certainty over the budget.

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During a panel debate at the end of the day, Stewart Segal, outgoing chief executive of the Association of Employment and Learning Providers (AELP), expressed concern over complexity of the new system, and warned of the potential for getting things “badly wrong”.

Earlier in the day, Graham Hasting-Evans, managing director at NOCN, had also criticised the government for the slow pace of the reforms, saying that he was “disappointed” at the lack of progress.

Speaking on the Thursday morning, Sir Michael Wilshaw, chief inspector of Ofsted, challenged providers to develop high quality apprenticeships. During a Q&A session after his speech, for which he was joined by Paul Joyce, Ofsted’s deputy director for FE and skills, Sir Michael defended his controversial views on the FE sector, saying that “when you look at the figures, it’s pretty dire”.

Shakira Martin, vice president for further education at the National Union of Students, exhorted the government to include the apprentices in its reforms, calling for the apprentice voice to be “integrated” into the Institute for Apprenticeships.

Shadow Skills Minister Gordon Marsden praised the government’s commitment to apprenticeships, but challenged it to deliver quality as well as quantity, saying that “we owe it” to apprentices.

For more on the action, look out for our AAC supplement next week.

FE providers may have to fulfil a new set of criteria in order to be approved by the government as fit to work with employers on delivering apprenticeships, FE Week has found.

In the coming months, the government will hold a consultation with providers about the requirements of the Skills Funding Agency’s (SFA) register of training organisations (ROTO), which providers can only access if they pass a set of capacity and capability questions.

This will include a discussion of how new criteria will be applied going forward, according to Keith Smith, newly-appointed director for levy implementation at the Department for Business, Innovation and Skills (BIS), and director of funding and programmes at the SFA.

Mr Smith told a packed audience at FE Week’s Annual Apprenticeship Conference 2016: “We’re going to have to revisit [ROTO], because one thing that employers are telling us really clearly is, we need to know bits of information about the providers … we actually want to get some confidence that these providers are going to deliver a certain set of services to us.

“What we’re going to be doing over the end of spring/early summer time is we’re going to have to have a big debate about this; we’re going to have to have a consultation with you about the requirements in the register and how we actually apply potentially new criteria going forward.”

Outlining what this would mean for providers in the future, he added: “I’m no longer the middle man … This new system, this new service will give capability for your employers to deal with that front-end decision making, will provide them with capability to transact on that, so they then can understand and select a provider from you guys to actually do the work.”

This issue of new criteria for training providers came up again at the conference, in a later panel discussion (pictured) among leaders from the FE sector.

Peter Lauener, chief executive of the SFA and Education Funding Agency, also said that ROTO needed to be looked at again.

“We need to look again at that, it’s designed to fairly basic levels, and proportionate levels, a set of tests, but we will have to review that again,” he said.

He compared the situation to the previously used individual learner accounts (ILAs), a scheme that was announced in the 1997 Labour Party manifesto to support adult education with a system of tax incentives from employers, as well as cash contribution to individuals.

Launched in 2000 in the form of financial reimbursements to educational course providers for the cost of the ILA incentives, the programme was abandoned in October 2001 because of evidence of mis-selling.

Mr Lauener said: “One of the problems with that is that was that it was open to all providers, 8,910 signed up to that, around 6,000 took part and there were some pretty bad apples in that mix.

“We’re very alive to those issues, we’ll be developing proposals to make sure that any provider that is available for an employer to use meets the right standards.”

Stewart Segal, chief executive of the Association of Employment and Learning Providers (AELP), said: “Employers do need to have a choice, and by the way I think they have a huge choice in the current system.

“I picked up from Keith that there is a new set of criteria … that needs to be carefully managed over a period.

“It would be crazy if you switched [ROTO] on overnight, but employers do need to have the choice of going with the provider that they need — and they need to pass a requirement, and set of criteria that we believe is reasonable, is transparent and open.”

Ofsted looks set to consult with FE providers on removing separate graded judgments on the quality of teaching, learning and assessment, FE Week can exclusively reveal.

The consultation plan was revealed in a Department for Education white paper, called Education, Excellence, Everywhere, published on March 17 that indicated it would only apply to schools.

But FE Week quizzed chief inspector Sir Michael Wilshaw (pictured far right) about this later that morning at our Annual Apprenticeship Conference in Birmingham, and he indicated it would apply to all providers falling under the common inspection framework (CIF) including those from FE.

A DfE spokesperson subsequently said this was the department’s intention.

Sir Michael was asked by FE Week if the plans to be consulted on would involve separate graded judgments for teaching, learning and assessment being removed for FE as well as schools.

He replied: “We would have to have the consultation, but whenever we have changed something for schools it has usually had an impact on FE.”

He added: “Outcomes are outcomes and outcomes are usually good if the quality of teaching is good.

“It is very rare that you get outcomes that are bad and teaching that is good, so I’m not against [removing the graded judgments].”

Sir Michael also said that in the course of a day-long inspection “we don’t see every lesson and we don’t see every area of the curriculum but we get a sense of what is going on in classes”.

“What we are going to do in future inspections is look at the quality of leading, look at the culture, behaviour.”

The white paper said: “Ofsted will consult on removing the separate graded judgments on the quality of teaching, learning and assessment to help clarify that the focus of inspection is on outcomes and to reduce burdens on schools and teachers.”

But a DfE spokesperson then told FE Week: “The intention is that this proposal will cover the entire CIF. My understanding is that includes FE providers in general.”

Speaking about the plans, Education Secretary Nicky Morgan (pictured) said: “This white paper proposes that Ofsted will consult on removing its judgment for quality of teaching — because we know it both drives workload and because, and I’ll repeat it again, it’s outcomes that matter.

“If pupils are achieving well and making sufficient progress they are being taught well, end of story.”

Controversy has raged for years over the value of lesson inspections.

FE Week reported widespread sector support for Ofsted’s decision to scrap graded lesson observations in May last year.

Stewart Segal, the Association of Employment and Learning Providers chief executive, said at the time: “On balance we think that not grading individual lesson observations is the right thing to do.”

He stressed that: “Even if individual lessons are not explicitly graded it must be very transparent as to what inspectors are looking for in the delivery of teaching and assessment.”

Main pic: Nick Linford, interim editor speaking with Sir Michael Wilshaw

The chair of a group of influential MPs has slammed the government’s progress on apprenticeship reform, saying he doesn’t see a “hope in hell” of the target for 3m new apprenticeships by 2020 being achieved.

Speaking from the stage at FE Week’s Annual Apprenticeship Conference 2016, Iain Wright (pictured), chair of the Business, Innovation and Skills Committee, said he had moved from feeling concerned about the situation, to being alarmed by the government’s slow progress after George Osborne failed to finesse the details in his budget.

“I don’t think we’ve got a hope in hell of achieving that 3m target,” he said.

“I really worry about this and think we are getting to the stage where we really need to question the minister [Nick Boles],” he said.

Mr Wright’s speech was applauded by the audience at the Birmingham International Convention Centre as he told host Emily Maitlis of his concerns, raising the apprenticeship levy as a key area where the government’s plans lacked clarity.

“I’m particularly worried that 98% of employers who are going to pay the levy — how are they going access skills funding?

“I have heard that it was all going to get sorted in the budget … the word apprenticeships didn’t come from [George Osborne’s] lips.”

He also criticised the government’s plans to make further announcements on the levy later in the year.

“Further work will be outlined in April and further details in June. They are making this up as they go along! They have announced the policy and now are frantically thinking: ‘How on earth are we going to do this?’” he said.

Mr Wright said he thought the levy could end up being delayed from its planned start date in April next year.

“We want him to achieve the 3m, we want to see an improved skills workforce, but given these huge delays and the massive uncertainties that he hasn’t been able to answer — are you going to delay delivery until April 2018 in order to make sure that this isn’t botched, that it is put in correctly?” he asked.

Mr Wright echoed earlier comments made by Shadow Skills Minister Gordon Marsden, who said that “the devil is in the detail” when it comes to the developments in apprenticeship policy.

“There’s absolutely no detail, frighteningly so close to the implementation date,” he added.

“The government really needs to think what it means. To pause, reflect, and get this right.”

Only companies that are paying the apprenticeship levy will have access to the new funding system when it is launched in April 2017, the co-chair of the government’s Apprenticeship Delivery Board has revealed.

Nadhim Zahawi (pictured above) dropped the bombshell this afternoon at FE Week’s Annual Apprenticeship Conference, in Birmingham.

“The core offering that we will be launching in April 2017 will effectively be delivering the levy for the two per cent levy payers, while maintaining stability in the rest of the system,” Mr Zahawi, who is also the Prime Minister’s apprenticeship adviser, said.

“What you want is a core offering and make sure it worked and delivered for those companies who are paying the levy, and then it’ll start to migrate to the rest over a period of time,” he continued.

Sue Husband, the director of apprenticeships and delivery service at the Skills Funding Agency, also confirmed that “non-levy paying companies will still have access to government funding” once the levy has been launched.

“The digital apprenticeship service in the long-term will absolutely be the place where all businesses will be able to access funds for apprenticeship training in the future,” she continued.

“To put people’s minds at ease in terms of SMEs, they will still have access to funding for apprenticeships,” she concluded.

Mr Zahawi added that they would be running a “virtual reality type pilot” with levy-paying employers, to ensure that it was ready in time for April 2017.

“I am very confident that we will deliver the system that will deliver for the levy payers,” he continued.

“It will absolutely work,” he said.

More information about the levy implementation will be available from April, Ms Husband said.

The news comes the day after the chancellor announced as part of the budget that levy payers would receive a 10 per cent top-up on their monthly levy contributions.