Third apprenticeship rate consultation as ESFA considers changes to eligible cost rules

The current apprenticeships rate review is set to undergo its third consultation as the Education and Skills Funding Agency steps in to consider changes to its eligible costs policy.

The agency is expected to launch a review of its rules that decide what costs count towards apprenticeship training tomorrow – inviting 600 organisation to take part.

It comes after the Institute for Apprenticeships and Technical Education announced last week that it would delay the outcome of its funding rate review until the agency’s work in this area is complete.

The IfATE’s funding band consultation was first launched in February and proposes a controversial new model that could see rates cut by over 40 per cent.

The institute then opened a second consultation on a revised “rates-based variable model” in August, but concerns were raised that apprenticeships would become unprofitable if current ineligible costs are excluded from the new model.

Ineligible costs for apprenticeships, under current ESFA policy, include “enrolment, induction, initial assessment, initial diagnostic testing, or similar activity”.

Writing for FE Week at the time of the IfATE’s second consultation, Association of Employment and Learning Providers chief policy officer Simon Ashworth questioned how these costs can be deemed ineligible “when these are activities mandated by the ESFA and/or an expectation of what Ofsted would expect to see during inspection”. 

He said: “It is too easy for IfATE to pass the buck to the ESFA and argue that their hands are tied by the agency’s funding rules on eligible and ineligible costs.

“Both the institute and the ESFA need to work together to develop a solution; in AELP’s view, this means ESFA reviewing their funding rules on ineligible costs and the institute properly accounting for key mandated activity in the form of a general overhead input as part of their new funding band methodology model.”

Announcing the delay to its rate consultation last week, the IfATE said: “Many respondents noted that the model did not take account of those costs associated with the delivery of an apprenticeship which are not eligible for government funding.

“It is worth reiterating that eligible costs policy is outside the scope of this consultation, and there has been no change in this policy. Nevertheless, the ESFA have agreed in parallel to review current policy on eligible costs.”

The institute added that as the ESFA’s review of eligible costs may have an impact on the final funding model, “we need to ensure we understand these outcomes before we publish the full response to the consultation.

“We plan therefore to publish a full consultation response in parallel with the outputs from the testing work and the conclusion of ESFA’s review.”

Those organisations being invited to the ESFA’s review include provider representative bodies; apprenticeship trailblazer groups; employer providers; and the “top 30 main providers” funded by ESFA.

If an organisation does do not receive a direct invite they can contact their representative body or trailblazer contact and ask for their comments to be included in their response, the agency said.

No deadline for when the eligible costs review will conclude has been provided at this stage.

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