Delivering Advanced and Higher Apprenticeships under the Loans System in 2013 Skills CFA National Conference 29 th November Terry Fennell

Quick recap on the facts The Loans application process for qualifications will launch in March 2013 and will be an on-line application process with payments from August Advanced Learning Loans can be applied for apprenticeships and single qualifications at Level 3 and above that appear on the LARA Loan repayment will be equal to the rate shown on the LARA and will only start once the learner has finished their apprenticeship/qualification Repayments start once the apprentice is earning more than £21,000 gross a year. Repayment of loans via HMRC will commence in April 2016 in line with developments in the HE repayment system. Providers not responsible for providing IAG on financial matters but will be required to ‘signpost’ to Money Service outlets

The Position on 25+ Apprenticeships at Nov approximately 8,500 x 24 Year Old starts in 2011/12 = AELP predicting significant downturn in 24+ starts 12/13

The Sector Nov 2012

The Loan Nov 2012 * Amount of ‘facility’ depends on provider track record in delivery to 25+ age group 2010/11

Decision Time for Providers... Opt In Commercial business opportunity Continuity of Provision offer Non – SFA Income Stream Potential new business and clients OPT Out New operational and delivery model Viability of offer VAT Charges for most ITP organisations – Disadvantage Additional administration New rules to follow SFA has told AELP that 819 Providers have ‘accepted’ their facility offer at November 20 th Some additional offers given to providers who expressed a commercial interest to deliver Loans.

More Operational facts 25+ Apprentices on L3 + provision who started their programme prior to Aug 1 st 2013 will be funded in 2013/14 & beyond – Its your last year so make the most of the final chance to deliver apprenticeships to this cohort..... All of the SASE requirements apply for Apprentices funding their framework with a Loan? Do we agree with that...! In Apprenticeships, the funding rate on LARA is the maximum Loan amount less the 50% assumed contribution from the employer. The employer contribution can be made either in cash or in kind. Where Higher Apprenticeship is made up of both FE and HE elements, learners will have to apply for separate loans to cover both the FE and HE elements of their Higher Apprenticeship. Not an ideal scenario...! The Student Loan Company pays the provider on a flat monthly profile for the duration of the programme or whilst the learner remains in learning

Commercial Considerations Question : Who is eligible for a 24+ Advanced Learning Loan? Answer: Basically, any 24 + resident in the UK & undertaking eligible provision at an approved training organisation. Also Loans are not means tested or subject to current employment status. The Loans repayments are deducted from earnings through the tax system from April 2016 early voluntary repayments can be made The loan repayments rates are competitive at 9% of earnings above £21,000. If earnings fall below £21,000 repayments will stop until earnings go back above. If apprentice is earning above £21k, for eg £25k then average repayment would be £30 per month or employer support options could be available...? Opportunities outweigh the negatives...?

The Challenge for Apprenticeships

The VAT Debate Confirmed November 2012 that VAT will apply to the fee charged by ‘for profit’ organisations. Government aware of the impact on Commercial Organisations and on the marketplace for Apprenticeships NAS working on a possible option where the Provider draws up a separate agreement with the Employer, meaning the invoice is sent to the Employer who pays the Vat on the Fee paid by the learners and claims this back from HMRC on usual returns..... AELP is actively supporting this option and will publicise if/when it has been ratified by all concerned agencies. Regards the practical implementation of VAT on fees, AELP would advise providers to get expert advice on the best ways to apply the regulations

More Support  Skills Funding Agency – Management of the facilities, monitoring of performance and recycling of funding across providers. earningLoans/  Student Loan Company – Managing the applications, notifications to learners and payments to providers  LSIS – Offering a range of support materials to assist Providers to Spring

In Summary The years of Government funding support for businesses is coming to an end which is a pity, but access to 24+ Advanced Learning Loans does offer personalised CPD funding option to whole new market. Granted the apprenticeship offer is going to be harder to ‘sell’ to applicants, but there may be ways to work with employers to ‘share the costs’ and benefits’ Providers may need to diversify in to the ‘single qualification’ market on top of the usual apprenticeship offer Providers need to be aware of some consequences of the withdrawal of state funding for Level 3 + provision from August 2013 Knowledge and Awareness sessions for key staff in the promotion and administration of Loans

Questions and final observations