Getting started

apprenticeship funding rules getting started

As an End-Point Assessment Organisation, we are keenly aware of how difficult and confusing apprenticeship funding rules can be. You just want to deliver your apprenticeship program, and then you find out that there are all these complex rules you have to know.

We sympathise. After all, we have to follow them, too!

These rules can be labyrinthine, opaque and positively filled with asterisks of every variety.

But it doesn’t have to be that way. And that’s why we created this ultimate guide.

Whether you’re an Employer, Employer-Provider or Training Provider, we’re going to make all these apprenticeship funding rules as simple as possible.

But first, we need to get a handle on what we’re talking about.

What Are Apprenticeship Standards?

All apprenticeship programmes delivered by Employers are created and delivered against Apprenticeship Standards. Included in these new and improved standards, different from the apprenticeship frameworks that came before them, are a series of knowledge, skills and behaviour criteria created by groups of Employers and recognised by the government.

No matter what apprenticeship you’re delivering, your apprentice’s training must develop against these standards.

This was done in order for apprenticeship programmes to deliver the knowledge, skills and behaviours that employers need in their apprentices.

If you’d like to see the knowledge, skills and behaviours that your apprenticeship standard will require, visit the Institute for Apprenticeship and Technical Education and search for the apprenticeship programme you want to deliver. The corresponding standard will tell you everything they will learn during their training.

Naturally, the type of training they receive will directly affect the funding they get.

More on this later.

All About the Apprenticeship Levy

As part of the 2017 apprenticeship reforms, the Apprenticeship Levy was introduced in order to get large employers more involved in the funding and execution of apprenticeship programmes.

This made a lot of sense. There were loads of large organisations out there sitting on large piles of money, not doing anything. So, the government thought, if there’s a skills shortage, why not give big employers a little push to invest in apprenticeships and further education?

And so, the Apprenticeship Levy was born.

In effect, the Apprenticeship Levy is a tax on businesses with a pay bill over £3 million. 0.5% of the cost of their pay bill is collected by the government and reserved for use by that Employer for apprenticeships. Any funds raised that are not used by that employer are reallocated to other apprenticeship programs.

Apprenticeship Funding Rules for Employers

employers

The government funds the vast majority of apprenticeship provision. This is great news for you, the Employer. Apprenticeships are a great way of training new people and ensuring you have the skilled and dedicated staff that will take your company to the next level.

As an Employer, you’ll need to know quite a bit about apprenticeship funding rules, since the nature of the funding you receive is largely dependent on what kind of company you have and the apprenticeship you’re delivering.

Don’t worry, though. Take our hand and we’ll guide you through all the ins and outs of your funding journey.

Setting up an apprenticeship service account

In order to get access to government funding for your apprenticeship program, you’ll need to create an account on the apprenticeship service. This is a digital interface designed to support the uptake of apprenticeships.

You will use the apprenticeship service to manage your apprenticeship funding and pay Training Providers and End-Point Assessment Organisations for their services.

Negotiating prices for training

Once you’ve set up your apprentice service account and your apprentice has started their apprenticeship program, you will need to choose a Training Provider that can deliver your apprentice’s training. You can find an appropriate Training Provider on the Register of Apprenticeship Training Providers.

You and the Training Provider must negotiate a price for the total cost of each apprenticeship, including the training costs and any subcontracted training. This cost must include the cost of End-Point Assessment, which tends to be more no more than 20% of the funding band maximum.

Key things to keep in mind:

  • When negotiating the price, you should include any training that overlaps with an apprentice’s prior learning or qualifications. The Training Provider should take prior learning into account when negotiating with you.
  • Every apprenticeship is entitled to a certain amount of government funding. If the price you negotiate with the Training Provider is higher than the funding band maximum, you must pay the difference. This difference cannot be funded from your apprenticeship service account or co-investment. (More on the co-investment later.)

Levy-Payers and Co-Investors

Once you have negotiated a price for the training for your apprenticeship, you will need to start paying your Training Provider for their services.

But with what money, you ask?

That’s a great question.

Once you have registered your apprenticeship program on the apprenticeship service, you’ll have access to cash. The source of cash and how you pay it will depend on the size of your organisation.

Apprenticeship Levy Payers

If your organisation pays the Apprenticeship Levy, you will have monthly instalments sent to your apprenticeship service account. How much you receive will depend on how much your business has paid for the Apprenticeship Levy. The amount of funding you receive will also include a 10% top-up. Payments will be taken according to the planned duration of the apprenticeship regardless of how training is scheduled.

What about Employers with a Pay Bill Of Less Than £3 Million?

Employers that do not pay the Levy must pay a co-investment fee for their apprenticeship program.

The current co-investment rate stands at 5%.

The government will pay the remaining 95% of the cost of the apprenticeship, up to the funding band maximum.

Where the funding band maximum is exceeded, you must pay all the additional costs above the funding band maximum.

You may agree on a schedule of co-investment payments with your Training Provider, which does not need to match the payments made by each month. However, this payment should ensure that your contributions are at least equal to the required co-investment when your Training Provider reports your contributions.

End-Point Assessment

In order for an apprentice to complete their apprenticeship, they will need to undergo End-Point Assessment.

End-Point Assessment is the final test that verifies that the apprentice has attained all the knowledge, skills and behaviours outlined in the Apprenticeship Standard.

An apprentice can only undertake End-Point Assessment once they have:

  • Met the minimum duration of the apprenticeship;
  • Satisfied the Gateway requirements set out in the assessment plan (you can access the assessment plan on the designated page for the apprenticeship on the IFATE website);
  • You, as the Employer, are confident that the apprentice is ready to undertake the final test.

Before Gateway, you will need to select an End-Point Assessment Organisation to deliver End-Point Assessment. You can find all approved EPAOs on the Register of End-Point Assessment Organisations.

After you have done so, the Training Provider will get into contact with the EPAO and will lead the relationship with them. This allows the Training Provider to make payment for the End-Point Assessment on your behalf. A written agreement will be drawn up, including arrangements for sharing information with the apprentice, re-takes and payment times.

Be sure that the price you agree with the Training Provider includes the cost of the End-Point Assessment. (This includes the cost of external quality assurance.)

End-Point Assessment tends not to cost more than 20% of the funding band maximum for the apprenticeship.

To see the full list of apprenticeship funding rules for Employers, visit the IFATE website.

Apprenticeship Funding Rules for Employer-Providers

employer providers

This section is for Employer-Providers: employers that have the ability to offer an apprenticeship programme and provide the necessary training.

The funding rules that apply to you are slightly different from those that apply to Employers.

Many of the rules that apply to Employers apply to Employer-Providers as well, so be sure to peruse the sections above.

However, the sections below detail many areas that apply to Employer-Providers specifically.

Assessing the cost of your programme

As an Employer-Provider, you will need to determine the cost of the apprenticeship programme you want to deliver.

You will need to assess the cost of your apprenticeship program and set it against the appropriate government funding band. Costs that are eligible for government funding include:

  • Delivery of training or Off-the-Job Training through a supporting Training Provider. This could include some or all of the training aspects of a licence to practice or a non-mandatory qualification. There must be a clear overlap between the training and the Apprenticeship Standard criteria;
  • Registration, examination and certification costs;
  • On-programme assessment;
  • Self-directed, online and/or blended learning;
  • Materials used in the apprenticeship delivery (ie equipment and/or supplies);
  • Admin included in apprenticeship delivery, including End-Point Assessment;
  • Time spent by employees/managers supporting or mentoring apprentices;
  • Additional learning required to re-take an exam related to a qualification or a portion of the End-Point Assessment.

If any of the costs from the above activities are brought in from a third party, they will be funded.

Contracting and subcontracting

The rules say that funding for your apprenticeship will be routed through you. This includes funding for English and Maths Functional Skills qualifications.

Do not use any subcontractor that subcontracts out to a second level. All your subcontractors must be contracted directly by you.

Evidencing costs

Since you are delivering the training and assessment, you need to report the full cost of it, including the End-Point Assessment, to the ESFA. This will determine how much of the funds in your apprenticeship service account or government-employer co-investment can be used.

You:

  • Must enter costs for training and End-Point Assessment into the individualised learning record;
  • Must evidence how all costs are calculated;
  • Must account for an apprentice’s prior learning;
  • Can include payroll, pay slips, expense claims, hourly pay rates for staff delivery training and assessment of apprentices and training plans that include the hours of training delivered;
  • Can claim salaries plus on-program costs of employees directly involved in the administration of apprenticeship training;
  • Can claim accommodation and facilities where you can show that it has been used for training or End-Point Assessment;

If the costs you calculate are more than the maximum allowed by the funding band, you must pay the difference between the band maximum and the total cost. This difference cannot be funded by your apprenticeship service account or your co-investment.

To see the full list of apprenticeship funding rules for Employer-Providers, visit the IFATE website.

Apprenticeship Funding Rules for Training Providers

training providers

As a Training Provider, the funding rules you have to follow have a lot to do with the costing of the apprenticeship and the receipt of apprenticeship funding.

The sections below detail the specific apprenticeship funding rules that apply to you.

Learning support and reasonable adjustments

You can get financial support from the government for reasonable adjustments for apprentices with learning difficulties or disabilities.

If you are training an apprentice with learning difficulties, you will need to:

  • Conduct an assessment to identify the support needed;
  • Deliver support to meet the apprentice’s identified needs and review progress;
  • Record and gather the appropriate evidence to show that the actions have been completed and outcomes are recorded;
  • Report in the ILR that an apprentice has a learning support need and what that support need is.

Learning support will be fixed at a monthly rate of £150 when it has been reported in the ILR for the months in which there is an identified learning need. If your costs exceed £150 per month but are less than £19,000 per annum, you can claim via the earning adjustments statement.

You must promptly claim for learning support through the ILR and the EAS. The government will not pay you for claims from a previous funding year if you do not claim on time.

What can be funded?

Before you begin the training process, make sure your apprentice’s Apprenticeship Standard is approved on your Employer’s apprenticeship service account.

Funds received from this account (and the co-investment) must only be used to cover the costs of training and End-Point Assessment.

The following is a list of eligible costs for funding:

  • Off-the-Job Training through a Training Provider, or evidenced costs for Employer-Provider delivery. If the training includes a licence to practice or a non-mandatory qualification, there must be a clear overlap between this training and the knowledge, skills and behaviours needed for the Apprenticeship Standard;
  • Registration, examination and certification costs associated with mandatory qualifications;
  • On-programme assessments;
  • Self-directed distance learning, online learning and/or blended learning;
  • Materials used in the delivery of the apprenticeship;
  • Any costs of administration directly related to the delivery of the apprenticeship;
  • Time spent by managers/employees supporting or mentoring apprentices;
  • Additional learning and/or the cost of re-taking an exam linked to a mandatory qualification or any component of the End-Point Assessment.

The activities above should be included in the price you negotiate with the Employer, which should include the price of End-Point Assessment.

Any of these costs can be brought in from a third party, and the government will fund them.

Where you buy the delivery of training from a third party, you must follow subcontracting rules (see below). Funds from an Employer’s apprenticeship service account or co-investment must not be used to fund other services from a third party.

Ineligible costs

You cannot claim government funding for the following costs:

  • Enrolment, induction, prior assessment, initial assessment, etc;
  • Apprentice travel costs;
  • Apprentice wages;
  • Any protective clothing/equipment required by the apprentice;
  • Development of teaching materials;
  • Off-the-Job Training delivered by self-directed distance learning;
  • Any training, optional modules, educational trips or trips to professional events in excess of those required to meet the Apprenticeship Standard. This includes training solely and specifically required for a licence to practice;
  • Any fees to a third party associated with a licence to practice;
  • Any fees for non-mandatory qualifications, including registration, examination and certification;
  • Student membership fees;
  • End-Point Assessment costs incurred but not included in the price negotiated between the Employer and EPAO;
  • Functional Skills qualifications;
  • Repeating the same regulated qualification where the apprentice has already achieved it;
  • Accommodation costs for the apprentice incurred because of their day-to-day work;
  • Capital purchases and their maintenance;
  • Time spent by managers/employees supporting or mentoring the apprentice in areas that are not directly related to apprenticeship training and assessment;
  • Specific services not related to the delivery and administration of the apprenticeship.

Additional payments

You and the Employer will receive a payment towards the additional cost associated with training if, at the start of the apprenticeship, the apprentice is:

  • Between 16 and 18 years;
  • Between 19 and 24 years and has either an Education, Health and Care plan provided by their local authority or has been in the care of their local authority.

End-Point Assessment

As a Training Provider, you will be in charge of preparing the apprentice for the End-Point Assessment.

When working with an Apprenticeship Standard, the Employer will receive government funding up to the funding band limit, which will include the cost of the End-Point Assessment. Monthly instalments will be transferred to you via the Employer’s apprenticeship service account.

Upon completion of the End-Point Assessment, you will pay the End-Point Assessment Organisation for the End-Point Assessment. The Employer will then transfer the agreed amount for End-Point Assessment to you.

If the End-Point Assessment ends up costing more than the agreed cost up to the funding band maximum, you must pay the difference.

You must ensure that the price you agree with the Employer for the apprenticeship includes the amount the Employer has negotiated with the End-Point Assessment Organisation. This includes the cost of external quality assurance.

Be sure to keep records of payment to your EPAO.

Contracting and subcontracting

You can use subcontractors to complement your delivery if requested by the Employer and agreed at the start of the apprenticeship. Subcontractors can deliver full or part of the apprenticeship training.

If you are going to use a subcontractor, they must:

  • Be published on the Register of Apprenticeship Training Providers;
  • Be either the apprentice’s employer, a connected company or charity; or
  • Deliver less than £100,000 of apprenticeship training and on-programme assessment under contract across all main providers and employer-providers between 1 April and 31 March each year.

You must perform your own due diligence and research subcontractors to ensure they have quality provision and robust procedures. You must not use a subcontractor where they subcontract out to a second level.

Calculating the cost of an apprenticeship

You, along with the Employer, will negotiate a price for the total cost of each apprenticeship, including training costs and any subcontracted training. These costs must include the cost of End-Point Assessment, which will be negotiated between the Employer and the End-Point Assessment Organisation.

  • You must account for prior learning when negotiating a price and document how you assessed prior learning.
  • You must enter the prices for training and End-Point Assessment onto the ILR.

You must not offset the negotiated price with costs of any service provided by the Employer.

Once the price is negotiated, the price upon completion should not be higher.

Co-investment

Where apprenticeship training is not funded from the Employer’s apprenticeship service account, Employers will co-invest 5% of the total negotiated price up to the funding band maximum.

Ensure that you keep evidence of the Employer’s co-investment contribution. Doing so will ensure that funding from the government will continue to be sent to the Employer.

It will be up to you and the Employer to determine a payment schedule for their co-investment. This means the payments could fall outside of a monthly structure.

Exceptions to the Employer co-investments restrictions are:

  • English and maths;
  • Where the Employer qualifies for extra support for small employers;
  • Learning support for the apprentice;
  • For any additional payment and disadvantage funding; and
  • Where the Employer delivers their own staff as an Employer-Provider.

At least every three months, you must:

  • Have collected matching co-investment from Employers; and
  • Report the cash value, on the ILR, of total employer contributions.

To see the full list of apprenticeship funding rules for Employer-Providers, visit the IFATE website.

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We hope this gave you a better idea of the funding rules involved in apprenticeships. However, to get into the nitty-gritty detail, dive into the IFATE website to make sure your t’s are crossed and your i’s are dotted.

To keep up to date with the latest End-Point Assessment news, follow us on Facebook, Twitter, Instagram and LinkedIn.

See you around The Hive!

 

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