1. Employer-responsive (ER) funding
(Apprenticeships and Train to Gain)
Nick Linford
WBL Residential 10-11am Thursday 17 September
ER Funding - 17/09/09

2. Contents 16-18 Apprenticeships (DCSF)
Provider landscape
Funding for 2009/10
16-18 Apprenticeship future
Provider landscape
19+ Apprenticeship funding
19+ Apprenticeship future
TtG funding history
TtG funding pressures
TtG funding for 2009/10
TtG cash-flow issues
TtG future
19+ Apprenticeships and Train to Gain (BIS)

3. 16-18 Apprenticeships

4. 2008/09 Maximum Contract Values (MCVs) Academic year (Aug 08 – Jul 09)
Provider landscape
2008/09 Maximum Contract Values (MCVs) Academic year (Aug 08 – Jul 09)
Local Authority £18m (3%)
FE £210m (32%)
Number of MCVs: 1161
Total MCV value: £664m
Average MCV value: £572k
Other public £30m (4%)
Private £316m (47%)
Charities £90m (14%)
Largest MCV value by provider type:
Charities: £41m (CITB)
Other public: £15m (MoD)
Private: £9m (Carillion Construction)
FE: £6m (City of Bristol College)
LA: £2m (Kingston Upon Hull City Council)
Source: LSC provider Allocations Spreadsheet (Feb 2009), ER Total

5. Funding for 2009/10
16–18 Apprenticeships
2008/09
2009/10
Increase
Starts (academic year)
108k
116k 7%
Completions (academic year)
68k
72k 6%
Participation (academic year)
213k
223k 5%
DCSF Funding (financial year)
£628m
£675m
11%
Source: Statement of Priorities, LSC (November 2008)
It should come as no surprise that Apprenticeships remain a high priority and a significant growth market

6. 16-18 Apprenticeship future
Raising the Participation Age (RPA) and the Apprenticeship Entitlement
“The ambition is that, by 2019/20, one in five young people will have started an Apprenticeship before the end of the academic year in which they reach their 18th birthday [from one in 15 at present]”
Source: Statement of Priorities, LSC (November 2008)
Role of the DCSF, YPLA, RPG, SRG, LAs, NAS and SFA in the planning, commissioning and payment processes from April 2010…..

7. Train to Gain and 19+ Apprenticeships

8. 2008/09 Maximum Contract Values (MCVs) Academic year (Aug 08 – Jul 09)
Provider landscape
2008/09 Maximum Contract Values (MCVs) Academic year (Aug 08 – Jul 09)
FE £494m (46%)
Number of MCVs: 2073
Total MCV value: £1bn
Average MCV value: £515k
Local Authority £21m (2%)
Largest MCV value by provider type:
Charities: £16m (CITB)
FE: £11m (West Nott College)
Other public: £11m (MoD)
Private: £6m (Economic Solutions Ltd)
LA: £1m (Lancashire County Council)
Other public £28m (3%)
Private £479m (45%)
Charities £44m (4%)
Source: LSC provider Allocations Spreadsheet (Feb 2009), 19+ ER Total

9. 19+ Apprenticeship funding
19+ Apprenticeships
2008/09
2009/10
Increase
Starts (academic year)
120k
122k 2%
Completions (academic year)
51k
57k
12%
Participation (academic year)
243k
254k 5%
DCSF Funding (financial year)
£328m
£367m
Source: Statement of Priorities, LSC (November 2008)
Nearly 50% rate reduction for ‘employer contribution’
25+ Apprenticeship rate reduced a further 10%
All 25+ budgets being squeezed

10. 19+ Apprenticeship future
Employer contribution (rate reduction) will rise further
Questions will be asked about whether providers are delivering 25+ Apprenticeships instead of TtG, as they tend to generate more funding
Questions will be asked about whether employers are making a financial contribution
TtG and Apprenticeship funding rules, rates and contracts likely to be more closely aligned
Pressure will be on to find savings and prioritise the younger apprenticeships (particularly year olds)
25+ Apprenticeship may simply prove too expensive

11. TtG funding history
National roll-out from Aug 2007, and by August 2008 £100m under-spend went to HE
FE Focus 08/08/08 and 29/08/08
TtG ‘flexibilities’ introduced from August 2008 and before long demand outstripped supply
FE Focus 03/07/09 and 04/09/09

12. TtG funding pressures
The flexibilities
Payment profile
More providers
“it is unlikely that there will be sufficient funding to meet the high level of demand from employers and learners for new starts, particularly in the August-March period of the 2009/10 academic year”
Source: Geoff Russell’s LSC letter to providers (11/06/09)

13. Pressures > flexibilities
For 2008/09 ‘flexibilities’ were introduced to stimulate both demand and supply. These included:
Skills for Life at Entry Level
Non-first full level 2s fully-funded (free)
Level 3 (incl ‘first’ fully-funded)
Selection of thin and unitised QCF quals
The policy worked > perhaps too well!
and 3% TtG premium has already been scrapped

14. Example for 1 NVQ in Construction
Pressures > payment profile
The payment profile for TtG changed in 2008/09
Example for 1 NVQ in Construction
Consequences
Monthly instalments
Instalments quickly ramp up
Funding for achievement is now starting to be claimed in big numbers
Big ‘carry-in’ funding commitments
£100
£200
£300
£400
£500 £0
Jan
Feb
Mar
Apr
May
Jun
Jul
09/10
08/09
07/08
Also
Cumulative instalments
Qualification rates simplified for 09/10, which will be expensive for LSC £0
£400
£800
£1,200
£1,600
£2,000
Jan
Feb
Mar
Apr
May
Jun
Jul
09/10
08/09
07/08
LSC and providers really struggle to forecast monthly instalment profile

15. Pressures > more providers
Number of 19+ ER contracts (TtG and Apprenticeship)
2073
1212
920
2006/07
2007/08
2008/09
Nearly all the additional contracts have been for new providers of TtG
Source: LSC provider Allocations Spreadsheet (Feb 2009)

16. TtG funding for 2009/10
£925m TtG budget in Grant Letter (more than last financial year but less than last academic year)
Financial year Grant Letter (government budgets)
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Academic year provider contracts (MCVs)
About half of financial year spent on last four months of 08/09 academic year. The eight months (67%) left of financial year only covers 47% of 09/10 academic year commitments

17. TtG cash-flow issues Providers are paid after monthly data submissions
Example for the first month (period one) payment for August
ILR W01 04/09/09
Submit monthly on 4th working day
OLDC portal and AMPS
LSC data collection and payment systems
Provider paid 14/09/09
BACS payment on 10th working day
47% cap for first 8 months will cause cash-flow problems and lead to stop-start enrolment patterns
Carry-in funding commitments may also result in few new starts until April 2010

18. TtG future is uncertain
Providers waiting for confirmed 09/10 contracts (MCVs)
Lack of funding and cash-flow issues mean many likely to go out of business
Government likely to scrap some flexibilities (possibly in-year for 2009/10)
Uncertain impact of QCF and interim ‘fullness’ definitions
NAO report said poor value for money (21/07/09)
Conservatives say they would scrap TtG
Skills Funding Agency (SFA) will take it over from LSC from April 2010

19. Any questions?
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