Subcontracting funding rules: scenarios March 2017

Content Policy context Policy implementation Funding and subcontracting rules – key points Introduction to scenarios Subcontracting scenario discussions Questions and comments

Policy context The wider policy document for apprenticeship funding in England from May 2017 is available on gov.uk. The document provides detail on how the policy has been adapted in response to feedback on initial proposals published by government in April 16 and then August 16. Throughout this time, employers, training providers and interested stakeholders have been engaged to inform the policy development. This valuable input has shaped the final funding policy. The reforms give employers more control over designing, choosing and paying for apprenticeship training. The funding policy supports the changes to the way apprenticeships in England are paid for, underpinned by the apprenticeship levy. Funding will follow employer choice, moving away from the current provider-led model and meaning providers will have to be much more responsive to what employers need.

Policy implementation In implementing subcontracting policy the Skills Funding Agency consulted with employers (levy and non-levy), employer-providers and providers of all types Prior to drawing up the initial proposals and Following feedback and prior to final proposals we obtained feedback by way of a survey, focus groups and consultation with our Provider Reference Group (PRG). The PRG supports the SFA on the implementation of changes resulting from apprenticeship reform policy, the introduction of the levy and the apprenticeship service for employers Subcontracting policy was reviewed and agreed prior to publishing the draft funding and performance management rules in October 2016, in time for the opening of the Register of Apprenticeship Training Providers (RoATP) and the associated Invitation to Tender (ITT) for applications The draft funding rules incorporated the subcontracting rules

Funding and subcontracting rules for new apprenticeship starts from 1 May 2017 The Skills Funding Agency funding and subcontracting rules apply to all employers and providers: those employers who will be using their digital account on the apprenticeship service (rules and guidance for employers) those employers who will not be using a digital account on the apprenticeship service (typically SMEs) who will use providers who hold a Skills Funding Agency contract Employer-providers (rules for employer-providers) Providers of apprenticeship training (apprenticeship funding and performance-management rules for training providers) The rules have been reviewed following feedback and issue 2 has been published in March on gov.uk

Subcontracting rules: key points - 1 Funding for all elements of each apprenticeship will be routed through a single provider that the employer has chosen, including English and maths– this is the main provider At the outset of each apprenticeship, a main provider and employer will agree a plan for its delivery The main provider must directly deliver some of the apprenticeship training and/or on-programme assessment associated with each employer’s apprenticeship programme. By apprenticeship programme is meant the apprentices that are being trained for the employer that has chosen the main provider The volume of training and/or on-programme assessment that the main provider directly delivers for each employer must have some substance and must not be a token amount to satisfy this rule. It must not be limited to a brief input at the start of each employer’s programme or involve delivery to just a few of a large number of apprentices

Subcontracting rules: key points - 2 The main provider can use delivery subcontractors to complement their own delivery if requested by an employer and agreed at the start of an apprenticeship. Delivery subcontractors can deliver full or part-apprenticeship frameworks and standards. The main provider must not agree the use of any delivery subcontractor where this would require them to subcontract apprenticeship training and/or on-programme assessment to a second level. All delivery subcontractors must be contracted directly by the main provider. The main provider must maintain the relationship with each employer at all times. The main provider must not allow a delivery subcontractor to lead that relationship.

Subcontracting rules: key points - 3 The main provider must only use delivery subcontractors that satisfy one of the following three criteria They are on the published register of apprenticeship training providers and have applied by the main or supporting application routes. They are the apprentice’s employer or a connected company or charity as defined by HMRC and are on the published register of apprenticeship training providers, having applied through the employer-provider application route. They are not on the published register of apprenticeship training providers but will deliver less than £100,000 of apprenticeship training and on- programme assessment under contract across all main providers and employer-providers between 1 May 2017 and 31 March 2018.

Subcontracting rules: key points - 4 If the main provider and an employer agree the use of delivery subcontractors, they must have an up-to-date written agreement in place with each employer that includes, for example the following for the delivery of their apprenticeship programme The apprenticeship training and/or on-programme assessment that you will directly deliver. The amount of funding you will retain for your direct delivery. The apprenticeship training and/or on-programme assessment that each delivery subcontractor will contribute to the employer’s apprenticeship programme. The amount of funding you will pay each delivery subcontractor for their contribution. The amount of funding you will retain to manage and monitor each delivery subcontractor. The support you will provide each delivery subcontractor in exchange for the amount of funding you will retain

Subcontracting rules: key points - 5 Special conditions for subcontracting Organisations who have successfully applied through the employer-provider route of the RoATP are only eligible to deliver apprenticeship training and/or on-programme assessment to apprentices employed by them or a company or charity connected to them as defined by HMRC. The main provider must ensure any employer-providers who are delivery subcontractors to them meet this requirement Employer-providers must evidence the actual costs of delivery of apprenticeship training and on-programme assessment Delivery subcontractors who have successfully applied to the supporting application route of the RoATP must not receive more than £500,000 of apprenticeship funding for their delivery each year Organisations who are not on the register of apprenticeship training providers must not receive more than £100,000 of apprenticeship funding for their delivery each year. Where the employer is the delivery subcontractor they must report the actual costs of delivery

Subcontracting scenarios Four subcontracting scenarios follow. In all cases it is important to consider the scenarios alongside the full set of subcontracting rules, rather than for example, any single rule. Following review of these scenarios it would be helpful to discuss other possible ones together.

Scenario 1 An employer has only one apprentice to train and chooses a main provider to deliver their apprenticeship training. Can the main provider subcontract all of the delivery? In this scenario the employer has chosen a main provider to deliver the apprenticeship training for them. The apprentice is the employer’s ‘apprenticeship programme’. The main provider must deliver some of the apprenticeship training and/or on- programme assessment.

Scenario 2 An employer has one apprentice to train each month and chooses a main provider to deliver their apprenticeship training. Can the main provider subcontract all or some of the delivery? In this scenario the employer has chosen a main provider to deliver the apprenticeship training for them. The apprentices constitute the employer’s ‘apprenticeship programme’. The main provider must deliver some of the apprenticeship training and/or on-programme assessment associated with each employer’s apprenticeship programme.

Scenario 3 An employer has a cohort of apprentices to train each month and chooses a main provider to deliver their apprenticeship training. Can the main provider manage the delivery for the employer by sourcing delivery subcontractors to do so? In this scenario the employer has chosen a main provider to deliver the apprenticeship training for them. The apprentices constitute the employer’s ‘apprenticeship programme’. The main provider must deliver some of the apprenticeship training and/or on-programme assessment associated with each employer’s apprenticeship programme.

Scenario 4 A main provider part-delivers a degree apprenticeship with a higher education institution (HEI) An employer chooses a main provider who provides the level 4 and level 5 component of a degree apprenticeship with the HEI delivering the level 6 and awarding the degree. Is this possible? In this scenario the employer would agree at the outset of the apprenticeship with the main provider that the HEI would be the delivery subcontractor and that they would deliver the level 6 component. The main provider delivers some of the apprenticeship training.

Subcontracting funding rules: scenarios Discussion Questions and comments Thank you