Health Education England has written to NHS trusts encouraging them to use or transfer their apprenticeship levy funds after finding their annual £200 million pot is not being spent fast enough.

A joint letter from HEE’s chief executive Ian Cummings and NHS Improvement’s executive director of nursing Ruth May warned that a “large amount of NHS apprenticeship levy funding remains unspent” and reiterated the importance of the NHS making “full use of its levy funds” or risking losing them.

The letter, which was sent on October 23, asked every individual NHS trust to “confirm how much you expect to spend and what is likely to remain unspent”.

It also reminded recipients of the opportunity to transfer 10 per cent of the unspent money to other organisations – which will increase to 25 per cent in April 2019 – and warned that “in the event that the transfer opportunity is not used, this money will be transferred out of the NHS, which would be a disappointing outcome”.

The NHS has previously said it will struggle to spend the £200 million apprenticeship levy payments it is shelling out annually within the 24 month timeframe that the government has set for levy-payers.

The Royal College of Nursing has also warned before that the apprenticeship route is “both costly and less efficient to the healthcare system in growing local workforce” as it takes four years to complete, as opposed to a three year university course. 

The apprenticeships levy was launched for employers with a paybill of over £3 million in April last year. They have two years to spend their levy pot on apprenticeships training, which the government hoped would boost apprenticeship starts.

In June, FE Week reported that the number of people starting an apprenticeship with the NHS had fallen by more than a third over the last two years.

The NHS is subject to a public-sector apprenticeship target, and needs to ensure at least 2.3 per cent of its workforce starts an apprenticeship every year.

In 2017/18 alone it would have needed to achieve 27,500 starts to hit this target. Instead, the health service saw just 12,611 starts last year, down 36 per cent on the 19,820 in 2015/16 and equating to just one per cent of its workforce.

This was despite a pledge from former health secretary Jeremy Hunt in 2016 to create a further 100,000 starts in the sector by 2020.

At the time, a spokesperson for HEE said the drop was “as a result of NHS organisations taking the time to implement and adapt to the new apprenticeship reforms and systems introduced in May 2017”.

The letter said it “commends NHS employer organisations for the progress achieved to date towards delivery of the NHS apprenticeship target” and recognises that a “great deal of hard work has gone into developing apprenticeship programme offers within the NHS so far”.

It added: “A large amount of NHS apprenticeship levy funding remains unspent. It is important that the NHS makes full use of its levy funds to offer high quality apprenticeship programmes, develop the workforce skills mix and build a sustainable domestic workforce for the NHS.”

A spokesperson for HEE said information about how close the NHS is to achieving its apprenticeship target will be published next month, but some trusts will not spend their full levy pot even if they achieve the target. She added that HEE does not determine how much levy each trust should spend. 

The Treasury has thrown the start date into doubt for when the 10-per-cent fee that small businesses pay when they take on apprentices will be halved.

Chancellor Philip Hammond announced yesterday during his Budget speech that SMEs will only have to contribute 5 per cent to the training of their apprentices, as part of further reforms to the levy.

Later, when asked by FE Week, a Treasury spokesperson said the policy change would be from April 2019. However, he has today said this was a “misunderstanding”.

“Further details will be set out soon, including dates,” he added.

It is understood that the start date for 5 per cent contributions will be decided on by the Education and Skills Funding Agency.

When FE Week reported that the change would come into effect from April, many in the sector raised concerns because it would encourage employers to delay starts.

The halving of the co-investment rate for SMEs is intended to engage more employers in apprenticeships – though surely some risk that it will also encourage others to delay their recruitment until the changes come into effect in April 2019 #Budget2018

— Dr Fiona Aldridge (@FionaAldridge) October 29, 2018

They’ve clearly written off the next 5 months. No doubt they’ll turn a blind eye when struggling app providers struggle even further!

— Barbs (@barbs_paul) October 29, 2018

The change follows Mr Hammond’s announcement at the Conservative Party Conference earlier this month that the annual apprenticeship levy transfer facility will rise from 10 to 25 per cent from April 2019.

He said he will also consult with businesses about further changes to the levy from 2020, following the slow take up and employer criticisms.

The Education and Skills Funding Agency has revealed plans to tighten up rules for training providers wanting to get onto its apprenticeships register and kick off those who aren’t delivering.

Keith Smith (pictured), the agency’s director of apprenticeships, told the AELP autumn conference today that the new beefed up Register of Apprenticeship Training Providers will open “within weeks, possibly sooner” and will then stay open indefinitely.

The thousands of training providers already on there will be asked to re-apply, in segments which will be “divided into groups” over the next 12 months. These groups will be focused on risk, with “high-risk” providers having to reapply first.

There is going to be a much stronger emphasis on quality

“We want to focus the re-application process on those providers that are potentially not delivering, and on those that we think will struggle to pass our new requirements,” he said.

New questions designed to “test a provider’s ability to deliver” high standards will also be introduced.

Mr Smith added that the agency is likely to introduce a rule that throws off providers who go 12 months with no delivery after joining the register.

There will also be greater scrutiny of providers getting on RoATP. Companies will have to have traded for 12 months at least in order to be eligible for application and provide a full set of accounts to be on the register.

The ESFA will look “very closely” at the registered address of the training provider to fish out whether it is actually a business address.

It will also look at the possibility of introducing a cap on how much apprenticeship funding a provider can earn.

“We’re going to test the idea of what we call recommended funding limits,” Mr Smith said.

“All providers on the register will have a financial cap and we will determine how much they are able to earn.” The agency thinks the caps could be good to “control, not just for quality reasons, the potential size and expansion” of providers.

The three provider routes – main, employer and supporting – will remain in place.

Mr Smith concluded: “There is going to be a much stronger emphasis on quality, on delivery models and much stronger emphasis on the type of business we have operating the money.

“We would like your views on whether these plans go too far or not far enough.”

The changes come after FE Week has reported extensively on the problems with the application process, and discovered, for example, one-man bands with no delivery experience being given access to millions of pounds of apprenticeships funding.

And earlier this month this newspaper discovered a loophole in RoATP after a broker advertised how companies can buy their way on to it for £50,000.

The register has been closed ever since the government shut it for review in October 2017, even though it was originally meant to open every quarter, leaving many providers wanting to get on there to deliver apprenticeships frustrated.

Four more apprenticeship providers have been banned from taking on new starts after facing criticism from Ofsted – bringing the total number barred up to 16.

The latest update to the register of apprenticeship training providers, on Friday, shows the four new providers which will be facing the penalty after being deemed as making ‘insufficient progress’ during early monitoring visits from the education watchdog.

This means the Education and Skills Funding Agency has temporarily barred all 16 providers who have made poor headway in at least one area in reports that have been published up until October 11.

Cumbria-based NC Training has been banned after it was found to be making ‘insufficient progress’ in every category.

Inspectors warned that leaders and managers “are not complying with the levy-funded apprenticeship requirements” and criticised quality improvement measures, “ineffective” governance, slow progress of apprentices and safeguarding measures which “lack rigour”.

NC Training started delivering levy-funded apprenticeships in July 2017, but also held eight subcontracts worth £1.6 million last year.

Lancashire’s Ensis Solutions has also been banned after being found to be ‘insufficient’ in one category – the progress of leaders and managers in ensuing apprentices benefit from high-quality training that leads to positive outcomes.

The report said leaders and managers had made “many recent improvements” to the quality of apprenticeships, but found that “too many weaknesses remain” and progress is “still not rapid enough”.

Both GTG Training and Kashmir Youth Project have been temporarily banned after receiving two ‘insufficient progress’ ratings.

Inspectors said that leaders at GTG Training, based in Wolverhampton, had “failed to recognise key weaknesses in the provision”, failed to make sure that trainers plan learning and assessment “sufficiently well” and did not have an “accurate view” of the progress of apprentices.

And Rochdale’s Kashmir Youth Project faced criticism for not ensuring “compliance with apprenticeship principles and requirements”, not acting quickly enough to eliminate weaknesses and not ensuring that apprentices receive high-quality training.

The banning of these four providers is the third group to be announced, after six providers were banned in September and followed by another six earlier this month.

Since October 11, four more reports have been published which reveal ‘insufficient’ progress being made by providers, but they are not yet on the ESFA’s banned list.

Guidance published by the ESFA in August confirmed that any provider making ‘insufficient progress’ would be barred from taking on new apprentices, either directly or through subcontracting arrangements.

These restrictions will continue until the provider receives a full inspection and been awarded at least a grade three for its apprenticeship provision. Full inspections should take place within a year of the monitoring visit.

The ESFA can overrule this guidance, but only if it “identifies an exceptional extenuating circumstance”.

Ofsted has been given £5.4 million in government funding as it prepares to carry out early monitoring visits of every new apprenticeship provider, which could number as many as 1,200.

 

The 10-per-cent fee that small businesses must pay when they take on apprentices will be halved, the chancellor has announced.

Philip Hammond (pictured) told the Commons today that SMEs must now only contribute 5 per cent to the training, as part of a “£695 million package to support apprenticeships”.

The Treasury originally told FE Week the change would come into effect from April 2019, but has since backtracked on this and said no fixed date has been decided on yet.

It comes after the skills minister Anne Milton told the Association of Employment and Learning Providers conference in June that issues with the fee have been “noted”, but there would be no announcement on a rule change anytime soon.

I can announce that for smaller firms taking on apprentices we will halve the amount they have to contribute

Announcing the change in his Budget speech today, Mr Hammond said: “As well as backing businesses to invest and grow, we will also make sure British workers are equipped with the skills they need to thrive and prosper.

“We’ve introduced a new system of T-level vocational training, introduced the first £100 million into the new national retraining scheme and through the apprenticeship levy we are delivering three million new high quality apprenticeships in this parliament.

“That system is paid for by employers and it has to work for employers.

“Today, in addition to the flexibilities I announced earlier this month, I can announce that for smaller firms taking on apprentices we will halve the amount they have to contribute from 10 per cent to 5 per cent.

“In total this is a £695 million package to support apprenticeships.”

It is expected that the change to a 5 per cent contribution will only apply to new starters when the change comes into effect.

It is, however, not yet known if the contribution will also apply to levy-paying employers when their levy pot is empty.

The Treasury told FE Week these details would be decided on in early 2019.

The AELP has been heavily campaigning to remove the employer contribution rule as it believes it puts SMEs off apprenticeships, and is the reason why starts have fallen so much since the introduction of the levy.

Its chief executive, Mark Dawe, is ecstatic with today’s announcement.

‘This is a major and positive shift which AELP has been pushing hard for since before the levy was introduced and it should enable providers to work with smaller businesses to start getting back to offering apprenticeships to young people and local communities,” he said.

“We are grateful to Anne Milton and Robert Halfon for their significant efforts in making this happen.”

Shadow skills minister Gordon Marsden welcomed the change but labelled it as a “minor improvement”.

“This responds to the strong lobbying there has been from the sector, and in particular the AELP,” he said.

It’s a minor improvement but it doesn’t address some of the key issues for small businesses

“It’s a minor improvement but it doesn’t address some of the key issues for small businesses with back-office admin or the failure of government to incentivise small businesses by creative use and support of the apprenticeship levy.”

The change follows Mr Hammond’s announcement at the Conservative Party Conference earlier this month that the annual apprenticeship levy transfer facility will rise from 10 to 25 per cent from April 2019.

He said he will also consult with businesses about further changes to the levy from 2020, following the slow take up and employer criticisms.

The apprenticeship levy is paid by employers with an annual payroll of £3 million or more, who can then spend their contributions on apprenticeship training.

Smaller employers can also access the funds generated through the levy, although they have had to pay 10-per-cent towards the cost of the training ever since its introduction.

There was no mandatory charge before May last year, simply an assumed contribution for apprentices aged 19 and over.

Since last May, only 16- to 18-year-olds at employers with fewer than 50 staff are fully funded and therefore free to train.

The national minimum wage for apprentices will rise again in April, from £3.70 to £3.90 per hour, the chancellor announced in his budget statement today.

The 20 pence extra is a 5.4 per cent rise and follows last year’s increase from £3.50, after Philip Hammond accepted recommendations from the independent Low Pay Commission.

The jump to £3.90 is larger by proportion than all other minimum wage groups.

For 18- to 20-year-olds, the increase is from £5.90 per hour to £6.15, while 16- to 17-year-olds will see their minimum wage go up from £4.20 per hour to £4.35.

And for 21- to 24-year-olds, it is going up from £7.38 per hour to £7.70.

Mr Hammond also announced further changes to the apprenticeship levy today, and will now require small businesses to pay just 5 per cent towards the training of a new starter.

This was part of a £695 million package to support apprenticeships, after the government previously said the annual apprenticeship levy transfer facility will rise from 10 to 25 per cent.

Up to £5 million is meanwhile going to the Institute for Apprenticeships and National Apprenticeship Service in 2019-20, to “identify gaps in the training provider market and increase the number of employer-designed apprenticeship standards available to employers”.

Today’s Budget reiterated that £100 million has been allocated to the first phase of the National Retraining Scheme.

It also detailed £20 million worth of new “skills pilots”.

This will include a £3 million scheme to help “employers in Greater Manchester and surrounding areas to address local digital skills gaps through short training courses”, and a £10 million pilot again in Greater Manchester, working with the Federation of Small Businesses, to “test what forms of government support are most effective in increasing training levels for the self-employed”.

Lastly, a £7 million match funding pilot “alongside employers to provide on-the-job training to young people not currently in employment, education or training in Greater Manchester, and to move them into sustainable career paths with employers”.

The government will also provide £38 million of capital funding to support implementation of the first three T-levels in 2020 across 52 providers, as announced earlier this month.

The Greater London Authority has become the first devolved area to launch a tender for its adult education budget.

Its procurement, worth an initial £130 million over four years, went live on Saturday and will run for two months until December 21.

London’s indicative total AEB is £311 million per year, although the final amount being delegated will only be confirmed by Department for Education in early 2019.

The chunk that is not going out to tender will be dished out to colleges and other institutions that currently receive adult education funding via a grant from the Education and Skills Funding Agency.

This value could go up to £200m over four years, subject to the final AEB allocation

“This contract notice relates to the procurement by the GLA of adult education and training services, expected to result in the award of multiple contracts for services, amounting to an estimated total value of approximately £130 million,” the authority’s tender notice says.

However, this value “could go up to £200 million over four years”, subject to the final AEB allocation to GLA confirmed by the DfE.

“Successful providers will enter into individual contracts to deliver a range of education and training services to both in-work and out of work London residents aged 19 or above, to help them gain qualifications, progress into further education and ultimately access and sustain employment,” the notice continued.

“The procured AEB funding will be used as match to some of London’s European Social Fund allocation.

“All AEB provision procured through this ITT will, therefore need to be compliant with the ESF regulations.”

The contracts will be split into two lots: adult education provision to out-of-work Londoners, which is expected to “constitute approximately 75 per cent of the total procurement value”, and adult education provision for in-work Londoners, which will be worth around 25 per cent of the total.

For each of the two lots, successful providers will be “expected to offer education and training services to equip Londoners with the skills and knowledge they need to gain qualifications, progress into further education” and either access work, or “achieve career progression”.

Applicants will be able to bid for “one or both lots and if awarded funding to deliver training services to both priority groups, this is envisaged to be under a single contract”.

The GLA is one of seven areas that will gain control of its AEB from 2019/20, through devolution deals.

Both Tees Valley and the Liverpool City Region combined authorities told FE Week earlier this month they would be launching their procurement processes by the end of October, but their tenders are so far yet to surface.

Cambridgeshire and Peterborough Combined Authority didn’t say when it would be going out to tender, but did say it was “currently finalising its procurement plan”, and the West Midlands Combined Authority will launch its procurement process “early in the new year”.

The Greater Manchester Combined Authority will also launch its AEB tender in the new year, while the West of England Combined Authority said it was still finalising its approach.

Earlier this year, the GLA revealed that it planned to move away from paying providers to deliver qualifications, to paying for wider outcomes such as progression into work.

It is expecting providers to collect destinations data “more completely”, and is considering introducing an “outcomes development fund” to provide extra resources for providers to help them develop new data collection systems.

FE Week reported last month that unlimited management fees in subcontracting are set to end under the GLA’s plans for devolution – as it looks to introduce a 20 per cent cap.

This newspaper also revealed earlier this year that the GLA is having to recruit a huge team of new bureaucrats to hand out the budget to London’s training providers from 2019, with most of their wages paid every year by top-slicing £3 million from the AEB.