ESFA Procurement for Non-Levy Paying Employers

 UVAC has been undertaking a considerable amount of work to outline the adverse impact the ESFA procurement results is and will have on Degree Apprenticeship provision for non-levy paying employers in many localities.

UVAC undertook a review of the results and has been contacted by approximately 20 HEIs in response to an invitation to talk through concerns. Sometimes discussions have been held on a confidential basis.  Although a couple of HEI submissions appear to have failed on technicalities, HEI bids were typically strong, fully compliant and met qualitative criteria. Thirty-five HEIs appear to have been successful, although many have contacted UVAC to express concern at the limited amount of funding allocated to them by the ESFA. A total of 714 organisations (predominately Independent Training Providers) were awarded funding.

A significant number of HEI bids have through the ESFA regional scale back process been pushed below the £200,000 threshold. In such cases HEIs have not been awarded funding. In one case a bid of over £500,000 was pushed below the threshold.

In considering the ESFA approach to the tender it is useful to know that approximately 2,200 organisations are listed on RoATP – 10% are employer providers, 10% FECs, 4% HEIs and the remainder Independent Training Providers (ITPs).  ITPs see the non-levy market as their key market for Apprenticeship delivery.

UVAC have/is raising the following points with HEFCE, ESFA and DfE and in the sector press:

• Degree Apprenticeship Cold Spots – The scale-back process will result in Degree Apprenticeship ‘cold spots’ in localities where there is no Degree Apprenticeship provision available for non-levy paying employers. Such ‘cold spots’ are usually, but not exclusively, outside metropolitan areas. These ‘cold spots’ are likely to correlate with higher education ‘cold spots’ Government, through various initiatives, has been trying to combat. This has implications for both the Government’s productivity and social mobility agendas. The failure to allocate funding to an HEI in a locality has an adverse impact on that locality.  This is not the same for independent training providers given their large numbers. Multiple independent training providers will typically deliver Intermediate (level 2) Apprenticeships in a locality.

• Failure to Provide Delivery Funding for Degree Apprenticeship Provision Developed through the DfE/HEFCE Degree Apprenticeship Development Fund (DADF) – UVAC is aware of many universities with DfE/HEFCE Degree Apprenticeship Development Funded (DADF) projects, with strong ESFA non-levy bids that, through the scale back process, have been pushed below the £200,000 threshold and therefore will not receive funding. Essentially ESFA is not, as a result of its procurement approach, providing delivery funding to HEIs who have been funded by the DfE/HEFCE to develop Degree Apprenticeship provision.  We know HEFCE colleagues have been in touch with HEIs in receipt of DADF funding, are analysing the position and have stated:

‘Please be assured that we will not seek to reclaim any funding related to Phase 1 project spend as expenditure related to that phase completed in March 2017.  For projects on-going at this time, we are prepared to engage in dialogue where there is an identified impact that may result in redirected or underused funding.’

While HEFCE’s assurance is useful, it does not address the fundamental issues and problems faced by such HEIs, their partners, local/regional employers and the skills needs of local economies.

• HEIs with a substantially reduced funding allocation will not in many areas be able to deliver the Degree Apprenticeship required by local employers – We are also well aware that even when successful HEIs have had their bids reduced so substantially they will not be able to deliver the Degree Apprenticeship demanded by employers or needed by local and regional economies.

• HE Engagement from all Mission Groups – HEIs from all Mission Groups (including the Russell Group) have had their applications scaled back resulting in no funding or limited funding being allocated by ESFA.

UVAC is undertaking the following action:

• For HEIs who have been awarded non-levy Apprenticeship funding we will be ascertaining how the growth process may support the delivery of Degree Apprenticeship actually demanded by employers. We anticipate that if ESFA sticks with the 10% co-investment requirement there will be significant underspend on non-levy provision, this will be ‘recycled’, but only to providers with an ESFA funding contract for non-levy paying employers. Many independent training providers have argued that their employer customers will not use Intermediate Apprenticeship if the 10% co-investment requirement is maintained.

• For HEIs who have been unsuccessful in the procurement UVAC is exploring how sub-contracting models may work. This may offer some HEIs without a non-levy contract, but with a strong relationship with another provider e.g. college partner a way forward.

• For all HEIs we will support UUK colleagues explore how the 10% levy payer transfer system may support provision. We believe this offers significant opportunities.

We believe ESFA are very aware of the impact of the procurement on certain localities. We have written to ESFA’s Chief Executive outlining the issues arising from the procurement and are proposing potential solutions to the problems raised and have discussed this with ESFA officials.  HEIs who wish to discuss the impact of the procurement and potential options in more detail and in confidence should contact Adrian Anderson [email protected] 

Transfer of the Apprenticeship Levy

ESFA have provided further details on arrangements for levy paying employers to transfer up to 10% of their levy payments to other employers to pay for the receiving employers’ Apprenticeships.  UVAC believes this is a very significant development for the HE sector and particularly for HEIs that did not secure funding from ESFA in the recent procurement for the provision of Apprenticeship for non-levy paying employers.  Further details can be found at: https://www.gov.uk/guidance/transferring-apprenticeship-service-funds

HEIs who want an informal discussion on the levy transfer system should contact Adrian Anderson: [email protected]

Institute for Apprenticeship Advice on Apprenticeship Funding Bands

UVAC is increasing concerned about the advice being provided by the IfA to Ministers on the Funding Bands allocated to Degree Apprenticeships.  We have made it quite clear to DfE officials that the funding band allocated to an Apprenticeship should be based solely on all costs relating to the delivery and assessment of the Apprenticeship. Issues of affordability, however, seem to increasing dominate discussion.  While, in due course, the affordability of the Apprenticeships employers will want to use may become a major issue, artificially deflating funding bands is the worst possible solution to making the levy pot go further.  Indeed, we have argued that deflating funding bands is the best way to drive quality Apprenticeship providers out of the Apprenticeship market.  Instead, we are suggesting that IfA and DfE use the other Apprenticeship ‘levers’ at their disposal; the 10% Government contribution to levy payers accounts, the 10% non-levy paying employer co-investment or indeed the £3million PAYE threshold at which employers start paying the levy to make the £2.5bn levy pot go further.

UVAC is exploring how we can undertake some work to develop a methodology to cost Degree Apprenticeship provision and this is a feature of our webinar programme.