Delivering Advanced and Higher
Apprenticeships under the Loans
System in 2013
Skills CFA National Conference
29th 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 2013
•
24+ 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 2012
Source: Data Service
FSR
25+ advanced app
25+ higher app
TOTAL
2009/10
2010/11
2011/12
(provisional )
20,600
68,000
91,400
100
700
1,600
20,700
68,700
93,000
+ approximately 8,500 x 24 Year Old starts in 2011/12
= AELP predicting significant downturn in 24+ starts 12/13
The Sector Position @ Nov 2012
2009/10
Source: Data
Service FSR
2010/11
25+ Higher
25+ Adv Level
25+ Adv Level
Apprenticeship
App starts
Apps starts
starts
25+ Higher
Apprenticeshi
p starts
Agrie, Horticulture and Animal Care
230
-
690
-
Arts, Media and Publishing
40
-
70
-
9,900
120
26,960
670
Construction
670
-
1,360
-
Education and Training
300
-
2,670
-
Engineering and Manufacture
1,300
-
2,630
10
Health, Public Services and Care
4,900
-
24,300
-
ICT
540
20
1,760
10
Leisure, Travel and Tourism
710
-
1,550
-
2,060
-
6,030
-
20,600
100
68,000
700
Business, Administration and Law
Retail and Commercial Enterprise
Total
Grand Total
20,700
68,700
The Loan Allocation @ Nov 2012
Direct Providers With
Indicative Loans Facility
No.
Loans Facility
Value
% of
Provision
GFE including Tertiary
221
£143m
61.8%
Higher Ed Organisations
12
£885,245
0.4%
Private Training Organisations
506
£82m
35.4%
Sixth Form College
40
£1,8m
0.8%
Specialist College
18
£2,5m
1.1%
Specialist Designated College
5
£1.2m
0.5%
802
£232m
100%
Total allocation to sector
* 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 20th 2012. 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 1st
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.
http://skillsfundingagency.bis.gov.uk/providers/programmes/24AdvancedL
earningLoans/
 Student Loan Company – Managing the applications, notifications to
learners and payments to providers
http://www.practitioners.slc.co.uk/further-education.aspx
 LSIS – Offering a range of support materials to assist Providers to Spring 2013
http://www.excellencegateway.org.uk/node/25566
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