1. Learner-responsive and employer-responsive funding Nick Linford Director of Planning and Performance 4 December 2008 "The move to a demand-led funding system in 2008/09 signifies a wholesale step change for the learning and skills sector." LSC 27 November 2007

2. 10.00Welcome and introductions 10.15Context and summary of changes 11.00Learner-responsive funding (16-18 and 19+) 12.30Lunch 13.15Employer-responsive funding – Train to Gain 14.30Coffee 14.45Employer-responsive funding – Apprenticeships 15.30Closing remarks 16.00End Workshop agenda

3. CONTEXT AND SUMMARY OF CHANGES

4. The context - 14-19 funding (DCSF) Legislation planned to enable: LSC funding role given to Local Authority (Lewisham Council) Compulsion to stay in education or continue training until 18 But policies to encourage participation being put in place now: Phased introduction of new Diplomas from 08/09 September Guarantee and entitlement to an Apprenticeship Expansion of Young, Pre, and Programme-led Apprenticeships Most planned in apprenticeships from 09/10: 655 660664666 238240 260 281 2007/082008/092009/102010/11 16-18 FE Full Time Learners ’000 (+2% in England) 16-18 Apprenticeships ’000 (+18% in England) 16-18 growth Source: LSC Grant Letter 2008/09

5. The context - adult funding (DIUS) Adult Safeguarded Learning Learners with learning difficulties and/or disabilities Skills Accounts Individual-responsive (excl. Skills Accounts) Train to Gain Employer Responsive, (excl. Train to Gain) The following graph is from page 26 of the Annual Statement of Priorities Projected expansion of demand-led funding between 2005-06 and 2014-15 in England Note projected dominance of Train to Gain and Skills Accounts by 2014 but more cautious than proposals in Leitch Review of Skills 05/06 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 06/0707/0808/0909/1010/1111/1212/1313/1414/15 Academic Year Funding including inflation (£ millions)

6. Summary of changes - new funding models 2007/082008/09 Further Education 16-18 model Adult learner- responsive model Employer- responsive model Apprenticeships Entry to Employment Train to Gain * 16-18 apprenticeships planned and budgeted in 16-18 model (DCSF) School 6th Forms *

7. Summary of changes - new funding formula New ‘demand-led funding formula’ for FE, WBL and TtG Introduction of: Standard Learner Numbers (SLN) National rates based on affordability Provider factor ALS allocated on a formula this x this + this = £ There will be winners and losers, as shown in this LSC graph for 16-18 funding Will get 2.1% real terms protection 4.2% in cash terms

8. Learner-responsive funding

9. The demand-led funding formula Simple at first glance SLN could be listed or unlisted and has maximum per learner £/SLN may be subject to transitional protection PF has up to six elements, based on history ALS allocations will include formula and negotiation element Total funding has a cap x x = + More complex in reality Standard Learner Number (SLN) National Funding Rate (£/SLN) Provider Factor (PF) Additional Learning Support (ALS) Total funding x x + = Oh, and three census dates replaced by minimum attendance

10. The Standard Learner Number SLNs are a new volume measure, replacing loadbanded and listed unweighted National Base Rates (NBRs). For example: A full time NVQ in Beauty has an unweighted listed National Base Rate of £3,052 in 07/08. This is 520 SLN glh or 1.1556 SLN (listed) in 08/09 A full time Cert in Literacy in 450glh has an unweighted loadbanded NBR of £2,641 in 07/08. This would become 1 SLN (unlisted) in 08/09. If 460 glh it would become 1.0222 SLN. If they are listed the SLN value can be found within the Learning Aims Database (LAD). This may be expressed as an SLN GLH value. If SLN is not listed in the LAD then the SLN = glh (A32) divided by 450

11. The Standard Learner Number SLN GLH for 16-18 and adult responsive funding are in the LAD http://providers.lsc.gov.uk/LAD/ Listed NVQ example Unlisted Basic skills example

12. Unlisted SLNs in more detail Full Time (1 FTE and 1 SLN) Guided Learning Hours Part Time (0.5 FTE and 0.5 SLN) Full Time (1 FTE and 1.2222 SLN) SLNs (divisor) 08/09 NBR (loadbands) 07/08 Watch out for part time Access to HE and part time onsite NVQs They will now be unlisted (SLN based on glh in A32)

13. Listed SLNs, the cap and rate changes Like now, where the QCA have recommended and/or LSC have identified a common duration for a course, a fixed rate is set in the LAD SLN values per enrolment are added together, but cannot exceed the 1.75 SLN per year cap (incl. entitlement if appropriate) The LSC will continue to review rates, and will annually change some listed rates and make others unlisted (and visa versa) Example for5 AS levels= 1.6667 SLN one learner Entitlement= 0.2533 SLN in one yearOne key skill= 0.08 SLN = 2 SLN But this exceeds 1.75 per year cap, so this learner SLN is in fact 1.75 The SLN or SLN GLH value is actually allocated to a year based on number of days between start and actual end date

14. 4 Applied AS in 190glh eachListed 180 SLN GLH 1 Key skill in 30glhListed 36 SLN GLH 4 AS levels in 140glh eachListed 150 SLN GLH 1 Key skill in 36glhListed 36 SLN GLH EntitlementListed 114 SLN GLH 4 AS levels in 140glh eachListed 150 SLN GLH 1 Basic Skill in 90glhUnlisted EntitlementListed 114 SLN GLH Cert in nums in 450glhUnlisted Cert in literacy in 225glhUnlisted Taught during the day and all start in Sept ’08 and achieve in July ‘09 4 AS levels in 140glh eachListed 150 SLN GLH 1 Key skill in 30glhListed 36 SLN GLH = 1.68 SLN = 1.4 SLN = 1.5 SLN = 1.67 SLN = 1.75 SLN How many SLNs for these learners?

15. When do SLNs count? The three funding census dates have been scrapped Instead there are minimum attendance measures, based on duration DurationMinimum attendance 24 weeks or more6 weeks 2 to 24 weeks2 weeks Less than 2 weeksOnce If an enrolment meets the minimum attendance criteria the SLN value assigned in the given academic year will be counted This is commonly referred to as the definition of a start Resits and transfers do not generate an SLN value

16. The National Funding Rate per SLN The LSC set fully-funded £ per SLN each year, and in 08/09 they are: School Sixth Forms£2,945 16-18 FE £2,860 Adult Learner Responsive £2,775 Things to note: Rates are set based on affordability, not inflation (e.g. 2.1% for 16-18 ) The co-funded rate will fall as fee % increases to 50% by 2010/11 A reduced co-funded rate is applied for fee payers If transitional protection is required a provider rate will be applied

17. The Provider Factor The provider factor is calculated annually in advance for allocations (based on 8 Feb ILR F05 for FE and ILR W13 for WBL/TtG) Each funding model has its own provider factor SLN x NFR now needs to be multiplied by a provider factor Provider factor (e.g. 1.335) = Success factor (e.g. 0.846) Area Cost (e.g. 1.200) Programme weighting (e.g. 1.217) Disadvantage (e.g. 1.079) Short-programme modifier (e.g. 1.001) x x x x

18. The Provider Factor Providers can see ‘indicative’ Provider Factors for each model in PaMS 1.335 Provider factor (example for 16-18 provider)

19. The funding earned! So a 16-18 year old enrolment in a college might earn: 1.75 SLN x £2,860 NFR x 1.335 PF = £6,681.68 Full time onsite NVQ (540glh)Listed 520 SLN GLH Key skills in Nums (40glh)Listed 36 SLN GLH Key skills in Comms (45glh)Listed 36 SLN GLH EntitlementListed 114 SLN GLH With this knowledge, how much funding for this learner? And this adult learner in a college with 1.411 PF? 1.57 SLN x £2,860 NFR x 1.335 PF = £5,990 Non-accredited creative writing in 90glhUnlisted 0.2 SLN x £2,775 NFR x 1.411 PF = £783

20. Additional Learning Support The demand-led funding formula does of course also include ALS SLN x NFR x PF + ALS = Funding ALS will be allocated as now, in advance and at provider level. However, in 2008/09 60% of the allocation will be driven by a formula and the remaining 40% will be negotiated (75/25 in 09/10) ALS claims in excess of £5,500 per learner remain as at present In the 16-18 model the formula is based on English and Maths point scores, and in the adult model it is based on the 06/07 level of study

21. Adult fee element and the co-funded rate Academic year2004/052005/062006/072007/082008/09 Unweighted 450 glh base rate £2,394£2,513£2,576£2,640£2,775 Fee element %25%27.5%32.5%37.5%42.5% Fee element ££599£691£837£990£1,179 Annual increase %15%21%18%19% Annual increase ££93£146£153£189 Increase on 2004/0515%40%65%97% Adult learner responsive fee element is now nearly double 04/05 level Plan is for fee element of 47.5% in 09/10 and 50% in 10/11 Train to Gain assumed fees are 42.5% of total (weighted) funding whilst each Apprenticeship element has a fee % listed on the LAD ALR co-funded rate = NFR – (NFR x Fee Element / PF)

22. Use of the formula at allocation level Can you work out what this adult-responsive allocation would be? 5,000 learners of which 2,000 are fee paying Average SLN per fee paying (co-funded) learner is 0.8 Average SLN per non-fee paying (fully-funded) learner is 1.2 Co-funded NFR is £1,939 = £2775 - (£2,775 x 42.5% / 1.411) Fully-funded NFR is £2,775 Adult responsive Provider Factor is 1.411 £1m for Additional Learning Support 3,600 SLN x £2,775 NFR x 1.411 PF = £14,095,890 fully funded 1,600 SLN x £1,939 NFR x 1.411 PF = £4,377,486 co-funded = £19,473,376 + £1,000,000 ALS Total assumed learner fees at 42.5%? 1600 SLN x £2,775 x 0.425 = £1,887,000

23. Employer-responsive funding

24. Apprenticeships (WBL incl. 16-18) FE mainstream (adult NVQs in workplace) Train to Gain (e.g NVQ 2 & SfL) Adult (19+) apprenticeships £330.2m (+ 4.5%) 16-18 Apprenticeships £677m (+ 7.1%) Workplace FL1/2/3/4 (e.g. NVQ) and SfL £907m (+ 55.5%) Apprenticeships £1007.2m (+ 6.2%) Employer responsive model 2008/09 Train to Gain £907m (+ 55.5%)

25. Train to Gain funding

26. Train to Gain Standard Learner Numbers All TtG Standard Learner Number (SLN) Values are ‘listed’ on the Learning Aim Database: http://providers.lsc.gov.uk/LAD/ TtG qualification SLN Value HigherLower Full Level 2 (e.g. NVQ)0.4290.286 Full Level 3 (e.g. NVQ)0.6440.429 Numeracy and Literacy0.18 ESOL0.18 SLN x NFR x PW x ACU x TtG uplift = Funding The TtG SLN rates are derived from ‘Activity Costs’ research undertaken by the LSC, and for 2008/09 are as follows: To claim the higher rate the provider must deliver ‘a minimum of 15 hours of eligible support/learning/training consisting of underpinning knowledge and understanding.’ Para 529 LSC PR&R

27. Train to Gain National Funding Rate The TtG National Funding Rate (NFR) for all providers in 2008/09 is: TtG qualification SLN Value HigherLower Full Level 2 (e.g. NVQ)0.4290.286 Full Level 3 (e.g. NVQ)0.6440.429 Numeracy and Literacy0.180 ESOL0.180 SLN x NFR x PW x ACU x TtG uplift = Funding SLN x NFR = unweighted funding £2,775 NFR Multiplied by £2,775 Unweighted funding HigherLower £1,190£794 £1,787£1,190 £500

28. Train to Gain Programme Weightings The Train to Gain Programme Weightings (PW) are uplifts which fund additional costs associated with the vocational sector. The PWs are listed for each learning aim on the LAD. There are three Train to Gain PWs: SLN x NFR x PW x ACU x TtG uplift = Funding TtG PWsSector Subject Areas (SSAs) 1.00 (A) IT Users, Retail, Commercial Enterprise, Hospitality, Leisure, Travel, Tourism, Business, Administration and Law 1.25 (J) Health, Public Services, Care, Agriculture, Horticulture, Animal Care, IT Practitioners, Hair and Beauty 1.50 (K) Engineering, Manufacturing Technologies, Construction, Planning and Built Environment, Transportation, Literacy, Numeracy and ESOL e.g. 0.429 SLN x £2,775 NFR x 1.25 PW = £1,488.09

29. Train to Gain Area-costs uplift The area-costs uplift (ACU) is in essence a London weighting and rises to a 20% increase for 15 of the most central London boroughs (with the remaining boroughs receiving a 12% uplift). However, other areas in the South East also receive uplifts from 12% to 1%. SLN x NFR x PW x ACU x TtG uplift = Funding For both Train to Gain and Apprenticeships the ACU is no longer determined by the provider location. In 2008/09 it will be determined by the delivery location – that is, employer premises. e.g. 0.429 SLN x £2,775 NFR x 1.25 PW x 1.20 ACU = £ 1,785.71

30. Train to Gain Uplift In June 2008 the LSC announced: SLN x NFR x PW x ACU x TtG uplift = Funding ‘To help stimulate provider engagement with Train to Gain and their capacity to deliver the service, we will increase the base funding rates by an additional 3% in each of the next 3 years, over and above the previously planned 1.5% per annum increase in rates’ This is applied as an addition uplift within the formula: SLN x NFR x PW x ACU x TtG uplift = Funding e.g. NVQ 2 in Health (10049873) high rate in Central London 0.429 x £2,775 x 1.25 x 1.20 x 1.03 = £ 1,839.28 e.g.

31. Train to Gain worked examples SLN x NFR x PW x ACU x TtG uplift = Funding SLN NFR PW ACU TtG Uplift Funding NVQ in Health, Level 2 (low rate) in central London NVQ in Health, Level 2 (low rate) in Bristol SLN NFR PW ACU TtG Uplift Funding 0.286 £2,775 1.25 (J) 1.20 1.03 £1,226.19 £1,021.82 0.286 £2,775 1.25 (J) 1.00 1.03

32. Train to Gain worked examples SLN x NFR x PW x ACU x TtG uplift = Funding SLN NFR PW ACU TtG Uplift Funding NVQ in Business, Level 2 (high rate) in central London Literacy, Level 1 in Bristol SLN NFR PW ACU TtG Uplift Funding 0.429 £2,775 1.00 (A) 1.20 1.03 £1,471.43 £771.73 0.180 £2,775 1.50 (K) 1.00 1.03

33. Train to Gain co-funding SLN x NFR x PW x ACU x TtG uplift x 0.575 = co-funding SLN NFR PW ACU TtG Uplift Fully-funded Co-funded NVQ in Construction, Level 3 (high rate) in central London 0.644 £2,775 1.5 (K) 1.20 1.03 £3,313.28 £1,905.14 Level 3 learners are fully- funded if they are Level 2 ‘jumpers’ or first full level 3 learners under 25 years of age All other Level 3 learners (incl. ESOL at every level) are co-funded. This means weighted funding is reduced by 42.5% in 08/09 (rising to 50% by 10/11) Simply multiply full-funding by 0.575 to calculate co-funding

34. When do Train to Gain SLNs count? DurationMinimum attendance 24 weeks or more6 weeks 2 to 24 weeks2 weeks Less than 2 weeksOnce If an enrolment meets the minimum attendance criteria the SLN value assigned in the given academic year will be counted This is commonly referred to as the definition of a start Train to Gain and Apprenticeship rules now mirror those being used in the learner-responsive models

35. Train to Gain monthly instalments Example £1,190 paid for a five month Train to Gain enrolment: £1,200 Dec Installment £0£200£400£600£800£1,000 Jan Inst. Feb Inst. Mar Inst. Apr Inst. May Achievement Monthly instalments paid, with last day of the month as census (trigger) First two months paid in first instalment using an ‘n+1’ approach But, 25% is held back for achievement Funding claim sent 4 th working day, instalment paid 10 th working day e.g. £600 over 5 months would lead to £200 installment in first month and £100 installments per month for the remaining four months

36. Train to Gain Payment Profile – worked example SLN NFR PW ACU TtG Uplift Fully-funded Co-funded NVQ in Beauty Therapy, Level 3 (low rate) in Manchester 0.429 £2,775 1.25 (J) 1.00 1.03 £1,532.74 £881.32 Month 1 Month 2 Month 3 Month 4 Month 5 Achievement Total funding Co-funded installments £220.33 £110.17 £220.33 £881.32

37. Train to Gain – additional flexibilities In July 2008 the LSC published details regarding ‘additional flexibilities’ New high rate threshold (15 hours) 3% uplift year on year Skills for Life eligible at any level Colleges doing NVQ 1s to be fully funded at Level 2 rates Up to 30% ‘additional’ (non-first) full level 2s permitted All Level 2s (incl. non-first) to be fully funded Up to 20% ‘additional’ (non-first) full level 3s permitted Level 3 Entitlement to apply to Train to Gain Colleges with Level 4 and 5 NVQs can negotiate to continue them In October 2008 DIUS announced further flexibilities for ‘bite-sized’ learning, but don’t expect details until January.

38. Apprenticeship funding

39. Apprenticeship ‘blueprint’ Apprenticeship Framework Employment Rights and Responsibilities This element is often covered as part of the NVQ or technical certificate Competence A National Vocational Qualification (NVQ) with assessment methods designed to test competence Transferable, or ‘key’, skills Frameworks include as a minimum, Key Skills in Communication and Application of Number Knowledge Some frameworks have a technical certificate whilst others demonstrate knowledge within the NVQ element

40. Apprenticeship qualifications on the LAD Frameworks Tab http://providers.lsc.gov.uk/LAD/

41. Apprenticeship rates on the LAD SLN Value Fee element percentage Programme weighting Employer Responsive Tab

42. Apprenticeship National Funding Rates Framework elements SLN Value Programme Weighting Fee Element NVQ 2 in Construction Operations1.0641.50 (K)40.8% Construction Award (Tech Cert)0.9781.30(C)40.8% Key Skills in Communication0.081.00 (A)17.5% Key Skills in Application of Number0.081.00 (A)17.5% Example - Construction Apprenticeship rates on LAD This now needs to be applied to the full formula, incorporating the National Funding Rate, Area-cost uplift and Disadvantage uplift SLN x NFR x PW x ACU x DU = Funding

43. Apprenticeship National Funding Rates National Funding Rate: SLN x NFR x PW x ACU x DU = Funding £2,860 for 16-18 year olds £2,775 for 19+ year olds Area-cost uplift: Maximum of 1.2 (+ 20%) in central London Based on delivery postcode as per TtG Disadvantage uplift: Maximum of 1.32 (32%) additional funding Based on learner home postcode

44. Apprenticeship Funding - example Framework elements SLNNFRPWACUDUFunding NVQ 2*1.064£2,8601.50 (K)1.201.0811£5,922 Tech Cert0.978£2,8601.30(C)1.201.0811£4,717 Key Skills0.08£2,8601.00 (A)1.201.0811£297 Key Skills0.08£2,8601.00 (A)1.201.0811£297 Total£11,233 Construction Apprenticeship for 16-18 in central London with DU of 1.0811 SLN x NFR x PW x ACU x DU = Funding * Includes funding for Apprenticeship Element

45. Apprenticeship Funding - example Framework elements SLNNFRPWACUDU Fee element Funding NVQ 2*1.064£2,7751.50 (K)1.201.081140.8%£3,401 Tech Cert0.978£2,7751.30(C)1.201.081140.8%£2,710 Key Skills0.08£2,7751.00 (A)1.201.081117.5%£238 Key Skills0.08£2,7751.00 (A)1.201.081117.5%£238 Total£6,586 Construction Apprenticeship for 19+ in central London with DU of 1.0811 SLN x NFR x PW x ACU x DU = Funding * Includes funding for Apprenticeship Element

46. Apprenticeship Funding - worksheet Framework elements SLNNFRPWACUDUFunding NVQ 3*0.9861.50 (K) Tech Cert (ACA)0.5561.30(C) Key Skills0.081.00 (A) Key Skills0.081.00 (A) Total Construction Apprenticeship for 16-18 in Bristol (DU of 1.0000) SLN x NFR x PW x ACU x DU = Funding * Includes funding for Apprenticeship Element £2,860 1.00 1.0000 £4,230 £2,067 £229 £6,755

47. Apprenticeship Funding - worksheet Framework elements SLNNFRPWACUDU Fee element Funding NVQ 3*0.9861.50 (K)48.5% Tech Cert0.5561.30(C)40.8% Key Skills0.081.00 (A)17.5% Key Skills0.081.00 (A)17.5% Total Construction Apprenticeship for 19+ in Bristol (DU of 1.0000) SLN x NFR x PW x ACU x DU = Funding * Includes funding for Apprenticeship Element £2,775 1.00 1.0000 £2,114 £1,187 £183 £3,667

48. Apprenticeship monthly instalments Monthly instalments paid, with last day of the month as census (trigger) First two months paid in first instalment using an ‘n+1’ approach But, 25% is held back for achievement (only applied to NVQ and Framework SLN, and only paid when full framework is achieved) Funding claim sent 4 th working day, instalment paid 10 th working day e.g. £600 over 5 months would lead to £200 installment in first month and £100 installments per month for the remaining four months Funding claim made with TtG data as part of a single monthly ER Individualised Learner Record (ILR) data collection ILR uploaded online to the LSC Online Data Collections System

49. Apprenticeship Funding - worksheet Framework elements SLNNFRPWACUDU Fee element Funding NVQ 3*0.9861.50 (K)48.5% Tech Cert0.5561.30(C)40.8% Key Skills0.081.00 (A)17.5% Key Skills0.081.00 (A)17.5% Total Construction Apprenticeship for 19+ in Bristol (DU of 1.0000) SLN x NFR x PW x ACU x DU = Funding £2,775 1.00 1.0000 £2,114 £1,187 £183 £3,667 Now calculate the monthly installments for a 3 month course Month 1 Month 2 Month 3 Achievement Total funding £528.50 £784.63 £1569.25 £3,667

50. Closing remarks

51. The targets tend to relate to the Public Service Agreements (PSAs) as listed within the CSR and DCSF/DIUS Grant Letter to the LSC The priorities and targets Numeracy from Entry 3 (SfL) Literacy (including ESOL) now from Level 1 (SfL) Full Level 2 Full Level 3 Level 4 added To achieve targets there must be a switch from non-priority provision. This has been termed ‘developmental learning’ (previously ‘other’ or ‘residual’), with planned falls from £508m in 2008/09 to £116m in 2010/11 (excluding FLT)

52. Funding optimisation revisited 1. Check and monitor the learning aims 2. Set appropriate course durations 3. Recruit and retain sufficient group sizes 4. Maintain high success rates 5. Regularly check the validity of the data “it is expected that providers will fully comply with the spirit and intention of the funding principles”.

53. The official reading material LSC Funding Guidance 2008/09 (six ‘booklets’ totalling 320 pages) > Funding Rates 0 50 100 150 200 250 300 350 Pages > Principals Rules and Regulations > Learner Eligibility > Funding Formula > ILR Funding Claims and Audit Returns > ILR Funding Compliance Advice and Audit Guidance

54. The unofficial reading material The hands-on guide to post-16 funding I’ve written this as a reference tool, which should be useful (and even interesting!) for senior managers and governors to curriculum and data/MIS staff www.fundingguide.co.uk There are also free resources and more workshop dates on www.lewisham.ac.uk/pf Let me know what you think!

55. THANK YOU and I hope you enjoyed the day