Apprenticeship reform and the implications for the NHS in EnglandCorrect as at 6th March 2016

Introduction The purpose of this document is to describe the significant changes to apprenticeships in England and how these changes relate to the NHS as a large public sector employer.

It is aimed at NHS managers and leads with responsibility for training, education, HR, organisational development, recruitment, workforce and related areas. However the apprenticeship changes will have a much wider impact across all NHS trusts and on their outlook to training, recruitment, workforce and budgets.

As this is a period of many changes, consultations and Government publications, this document is written as a ‘living document’ current at time of writing. This document will be updated in April 2016 with any updates and implications to apprenticeships for the NHS that are outlined in the Budget announcements in March. BackgroundApprenticeships are an increasingly important part of the long term plan for improved workforce development and enhanced productivity in England. The Government’s apprenticeship reform programme is aimed at ensuring Apprenticeships in England become more rigorous and more responsive to the needs of employers, its origins lie in Doug Richard’s November 2012 review.

The Government accepted the review’s key recommendations that:• An apprenticeship is a job in a skilled occupation.

• An apprenticeship requires substantial and sustained training, lasting a minimum of 12 months for all and involving at least 20% off-the-job-training.

• An apprenticeship leads to full competency in a role, as stated in a short and easy to read ‘standard’ designed by employer groups.

• An apprenticeship develops transferable skills, including English and maths, to progress careers.

• It trains the apprentice to the level required to apply for professional recognition where this exists.

The Government is committed to achieving 3million apprenticeship starts in England by 2020. English Apprenticeships: Our 2020 Vision: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/482754/BIS-15-604-english-apprenticeships-our-2020-vision.pdfExecutive Summary: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/484209/BIS-15-651-english-apprenticeships-our-2020-vision-executive-summary.pdf

2

Rationale for the ChangesThe Government wants to make all apprenticeships world class. A programme that is rigorous, responsive and meets the changing needs of employers. They want the new norm to be two equally prestigious routes to a great career: university or an apprenticeship.

Apprenticeship reforms are intended to:• Put Employers in the driving seat – groups of employers working together to design

apprenticeships so they meet the needs of the industry.

• Simplify apprenticeships – replacing complex frameworks with short, simple standards, written by employers in a language they understand.

• Increase quality – introduction of more rigorous testing at the end of the apprenticeship to ensure the apprentice is fully competent and grading to provide the opportunity for the apprentice to stretch their capability.

Defining the Changes1. Enterprise BillBusiness Innovation and Skills (BIS) are introducing legislation in the Enterprise Bill which will:

• Protect the term apprenticeship in law, putting apprenticeships on an equal legal footing with degrees and preventing misuse of the term.

• Give Government the power to set a target for public bodies including Ministerial Departments (with 250 or more workers in England).

• Place new duties on public bodies to report annually on progress to BIS.

2. Apprenticeship Levy• There will be a levy to help fund the increase in apprenticeship training

• The levy is being introduced to fund a step change in apprenticeship numbers and quality.

• The levy will put apprenticeship funding on a sustainable footing and improve the technical and professional skills of the workforce.

• The levy comes into effect in April 2017.

• It will apply to all larger public and private sector employers in the UK (20,000 employers are estimated as liable to pay the levy).

• As skills policy is a devolved matter Devolved Administrations will continue to have complete flexibility over how they support their business through training and apprenticeships. In England the levy will support post 16 apprenticeships.

3

• 0.5% of employers pay bill will be collected monthly via PAYE. All employers will have an allowance of £15,000 which means that the levy is applicable on pay bills over the first £3million. Example outlined on Page 8.

3. Improving the Quality and Recognition of Apprenticeships (Standards)• Trailblazers are groups of small and large employers who are leading the way in designing and

implementing the new apprenticeship standards.

• More than 1300 small and large employers in over 100 sectors are collaborating to design new world class qualifications for apprentices called: Standards.

• Each standard has three elements: - Core standard – the knowledge, skills and behaviours required for that job role- Options – elements of the job role which may be optional depending on the requirements of

the business, skillset and interests of the apprentice, or future career path- End Point Assessment – the method of assessing whether the individual has achieved the

required standardIndicative Funding Caps are now set at the start of developing a standard rather than a costing exercise being undertaken by the individual groups when developing the standard. Funding for the End Point Assessment comes from within the cap amount. The Funding Cap Table is on page 6 within the following document:https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/496151/Apprenticeship_standards_funding_rules_2016_to_2017_FINAL_v2.pdf

• All standards must last for a minimum of 12 months; have at least 20% of off-the-job training and have transferable skills between businesses ie not skills specific to one business.

• 71 standards are ready to be delivered and 154 are in development. There is a rolling monthly deadline for submissions of standards.

• There will be a migration from apprenticeship frameworks to standards over the course of the Parliament, with as much of this to take place by 2017/18 as possible.

• From April 2017 the design and delivery of high quality apprenticeships will be overseen by a new independent and respected quality body: The Institute for Apprenticeships (IfA). The IfA is currently being established.

• There are over 100 companies working with 20 universities and colleges to develop degree apprenticeships. Higher and Degree apprenticeships can include Further Education, Higher Education and Professional Qualifications.

4. Abolition of employer National Insurance Contributions for apprentices under age 25• From April 2016 employers of apprentices under the age of 25 will no longer be required to pay

secondary Class 1 (employer) National Insurance contributions (NICs) on earnings up to the Upper Earnings Limit (UEL) for those employees.

4

5. Traineeships• From August 2016 there is no longer a requirement for these to be solely delivered by those

training providers who have been graded ‘good’ or ‘outstanding’.

What Do the Changes Mean to the NHS?1. Enterprise BillIt is anticipated that the Enterprise Bill will become an Act in Autumn 2016.

The clause within the Bill provides flexibility on how to apply the target. The target therefore might be set on individual bodies, groups of bodies or parts of bodies, for example the NHS as one organisation or as individual NHS organisations. Where the group option is applied all bodies within the group, even organisations with fewer than 250 employees in England will be included in the duty to have annual apprenticeship starts of 2.3% of either it’s headcount or full-time equivalent. The target is for the whole workforce ie clinical and non-clinical.

A Public Sector Bodies Consultation on apprenticeship targets was launched 25 January 2016 and closed4 March 2016. This document will be updated in April 2016 and will include the outcome of the consultation as well as any implications to apprenticeships for the NHS that are outlined in the Budget announcements in March.

Questions 1-5 of the consultation sought responses on who should be in scope. Of particular importance to NHS Trusts due to the proportion of its workforce being part time employees is whether the target remains as Headcount or changes to Full Time Equivalent (FTE). Question 6 of the consultation sought responses to this.

Aspects for consideration in the consultation:• Based on current headcount figures available and taking into account only those organisations

with 250+ employees in England, a 2.3% target to the NHS as a whole would mean around 28,300 apprentice starts annually. If it’s FTE then the figure would be around 24,900. The figure might be divided regionally by Health Education England. For Example: Trust Headcount: approx. 8,600; FTE approx: 7,200. Apprenticeship Target based on Headcount: 198; Based on FTE: 166.

• Apprentices employed by an NHS organisation with fewer than 250 employees in England can only count toward the target if that organisation’s headcount has been used to set the target level.

• As the percentage is calculated either on the organisations own headcount or FTE (TBC) the organisation can NOT count within its own apprenticeship numbers those apprentices who work for organisations within its supply chain. This will be covered by the public procurement requirement and counted as part of that work.

• Apprentices employed by an Apprenticeship Training Agency (ATA) and paid and hosted by NHS employers can be counted as long as the individuals have been counted in the NHS organisation’s headcount/FTE to ensure the target is calculated properly.

• Which year end is going to be the measurement date?

5

There will be further expectations of the NHS as part of the public sector to support the growth of apprentices. This includes embedding apprenticeship requirement in large public contracts and using NHS leverage with NHS supply chain to influence other organisations.

2. Apprenticeship Levy• The money will be collected by HMRC. For NHS organisations in England individual employers’

funding will then be made available to each organisation using a new Digital Apprenticeship Service (DAS). Via the new digital account, NHS organisations will be able to access their levy ‘pot’ to pay for training for apprenticeships. IT systems are being investigated that will enable links into an employer’s HR system to reduce administration but this is not expected to be available until after April 2017.

• Once the levy is paid the Government’s view is that it is public money and the responsibility of BIS to protect its use as part of the apprenticeship programme.

• DAS will have information that employers will access to identify which training providers deliver each framework or standard enabling the NHS to self-select. DAS will enable NHS employers to pay their selected training provider and find a candidate.

• All training providers that employers can select from to deliver apprenticeship training must be on the approved list of training providers. Anyone delivering apprenticeship training must successfully complete the Skills Funding Agency’s Register of Training Organisations (ROTO). An NHS Trust might want to consider registering to be an approved Employer-Provider. If this is of interest the following link outlines the starting point to do this:https://www.gov.uk/government/publications/sfa-register-read-me-first-instruction-document.The SFA ROTO usually opens for new registrations every quarter, though dates aren’t published annually in advance. When the Register does open it is usually for approximately 3 weeks. The Register last closed on the 2 March 2016: https://www.gov.uk/government/collections/sfa-register-of-training-organisations

Ofsted will inspect all providers that deliver apprenticeship training that are on the approved training providers list.

• The following is the link to the list of training providers that the SFA have issued a notice of concern that employers can cross reference when selecting a training provider:https://www.gov.uk/government/publications/sfa-current-notices-of-concern

In the current funding model the Skills Funding Agency (SFA) contract with a range of quality assured training providers and allocate a funding amount so that the training provider can be responsive to individual employer’s requirements regarding which frameworks and standards they require.

In the future those employers who pay the levy will ‘hold’ the funding and will need to negotiate with their selected training provider the amount they pay them. There will be a funding cap for each standard or framework that is being trained against. The employer will access their levy ‘pot’

6

for each apprenticeship up to the maximum of the funding cap for that apprenticeship framework or standard.

• Employers who pay the levy will be able to use their funding ‘pot’, (up to a cap which will depend upon the standard or framework that is being trained against), to cover the costs of apprentice’s training, including English, Maths, assessment and certification. There may be occasions where employers who pay the levy contribute additional funds to the cost of their apprenticeship training:i) where the training they wish to buy is more than the funding cap for a particular standard

or framework andii) where an employer wants to do additional apprenticeship training and has spent all their

levy ‘pot’.

If the employer negotiates a lower price to the cap then the employer would benefit from more funding remaining in their levy ‘pot’ enabling the employer to train more apprentices.

Decisions are still to be made regarding the employer contribution from non-levy paying employers but it is anticipated these employers will be required to pay employer contributions for apprenticeship qualifications.

• The SFA will continue to be responsible for ensuring the list of training providers are all quality assured and Ofsted will continue to inspect the training providers. The SFA will put in place intervention strategies with training providers where appropriate.

• The funding in England can only be used to cover the costs of an apprentice’s training, including English and Maths, assessment and certification and not salary.

• If an NHS organisation in England uses its total levy contribution they will be able to access a top up to their digital account should they want to commit to more apprenticeship training.

• Currently the levy can be used to fund both frameworks and the new standards. However individual existing frameworks will be ‘switched off’ for funding new apprenticeship starts on an on-going basis once the new standard is developed. The date when all framework funding will be ‘switched off’ has not been decided.

• Trusts will need to consider how they are going to manage the cash flow within their levy ‘pot’ when they negotiate the payment plan with their selected training provider. Employers will pay the levy through their normal payroll processes monthly using PAYE real time information.

• Funding is not allocated from the levy ‘pot’ until it is paid. Therefore trusts will need to budget for their ‘committed spend’ potentially over different levy years depending on the start dates of apprentices and length of time to complete the qualification.

Example: 20 apprentices all aged 25 commence an apprenticeship standard in June 2017 that is under levy cap 3. Maximum funding for each apprentice under this cap is maximum £6k*Trust negotiates the following payment plan with training provider:

7

£2k for each apprentice in June 2017 (month 1, levy year 1)£1k for each apprentice in December 2017 (month 7)July 2018 (month 14, levy year 2) Successful End Point Assessment Undertaken.Trust pays £1k to end point assessment organisation.July 2018 (month 14, levy year 2) £1k for each successful completion paid to training providerTherefore £3k paid from levy year 1 ‘pot’ and £2k from levy year 2 ‘pot’Total: £5k paid for each apprentice saving of £1k on the maximum cap

* This figure is for illustration purposes only. The amount for each cap for the levy is still to be confirmed and should not be confused with the current caps within apprenticeship standards.

If a trust decides to pay more than the cap that is allocated for each apprenticeship qualification then the trust must use their own budgets to pay the difference.

Example of Trusts Levy ‘pot’:Trust Annual Pay Bill for 2017/18: £260millionLevy Payment Paid on: £257million Levy Payment and Trusts Levy ‘pot’ is: £1.285millionTherefore if utilising an apprenticeship standard under cap 3 at the example rate of £6k and paying out £5k due to trust’s negotiations above this would equate to 257 Apprentices.

Please note those employers who pay the levy will not have an opening balance of funding paid into their levy ‘pot’ by the Government.

Trusts need to consider their whole workforce training and qualification requirements and identify the business benefits of utilising the range of frameworks and standards across all the levels and what would be the return on their investment.

There are a number of final decisions that will affect NHS Trusts that are still to be made by the Skills Minister regarding the levy, for example:

a) How long will the levy funding remain in an employer’s account?Initially this is anticipated as being 24 months but 12 months has also been discussed. After this time unused funding will be re-distributed to other employers.

b) How can an employer agree that companies within their supply chain that won’t pay the levy, due to the size of their payroll, access the levy funding they have paid?This is subject to BIS working through how to facilitate this and ensuring is compatible with State Aid Rules.

c) What will the payment system be for existing apprentices? A separate payment system is being discussed to continue the Government’s contribution for existing apprentices.

d) Will there be additional funding that can be accessed from the levy in addition to the funding cap to support apprenticeship training for 16-18 year olds?Additional funding is anticipated for 16-18 year old apprentices, final decisions still to be made.

e) Can levy funding be used to fund apprenticeships for potential apprentices that already have a degree in a non-related subject who require the achievement of a lower level apprenticeship to undertake the job role?

8

This is being considered. One reason why previously individuals who had a degree weren’t eligible for apprenticeship funding unless the apprenticeships was at the same or at a higher level was because the Government had funded the university degree.

It is important that Trusts keep informed regarding the outcomes of these decisions. Further levy guidance is anticipated in Spring 2016.

Options for utilising the levyNHS organisations need to consider their workforce plans and how they can utilise their levy payment to meet the needs of their organisation. Options you might want to consider are:

• Maximising numbers through planned external recruitment This could involve considering every externally recruited role in bands 1-4 into an existing vacancy to be an apprenticeship and implementing a process that means the Recruiting Manager has to provide a business case if the role isn’t an apprenticeship.

• Converting existing roles to apprenticeshipsTargeting apprenticeships at key capability gaps within the existing workforce. This would raise existing capability. eg offering apprenticeships to existing support staff who do not already hold a full level 2 or 3 work related qualification. Or for example level 4 and 5 apprenticeships for management, leadership and team leading skills.

• Rethinking training delivery plansOffer an apprenticeship framework which includes the (QCF) competence certificate or diploma rather than just the stand-alone (QCF) qualification. Also develop new standards including higher and degree apprenticeship standards where there are gaps in qualifications for job roles.

• Maximising numbers through Whole Workforce Apprenticeship Plans Extend the roles that undertake apprenticeship qualifications from the traditional bands 1-4 roles and consider the benefits to the business of implementing higher apprenticeships eg. Assistant Practitioner Higher Level Apprenticeship and, where appropriate, degree apprenticeships. Higher and degree apprenticeships will attract higher levy caps. There are over 280 different apprenticeship frameworks and 71 standards available across a huge range of roles from business and admin, healthcare assistants, pharmacy, health care science, finance, housekeeping, project managers and HR. There are a further 154 standards in development.

• Using levy ‘pot’ within Related Health and Social Care Employers and Supply ChainThis is subject to BIS working through how to facilitate this and ensuring is compatible with State Aid Rules but start to consider how you might use your levy ‘pot’ to support the health and social care integration agenda.

9

3. Apprenticeship StandardsA number of new standards for health occupations are in development. To meet new BIS requirements this includes the development of:

A. the Apprenticeship Standard B. an associated Assessment Plan

A. Apprenticeship Standards already developed and awaiting final approval of their assessment plans that are health related are:

- Healthcare assistant practitioner (level 5) http://www.skillsforhealth.org.uk/images/standards/trailblazers/Trailblazers%20-%20Assistant%20Practitioner.pdf

- Healthcare support worker (level 2) http://www.skillsforhealth.org.uk/images/standards/trailblazers/Trailblazers%20-%20HCSW%20Standard.pdf

Standards that are currently being developed that are health related are:- Senior healthcare assistant/senior nursing assistant (level 3) with 4 pathways in adult nursing

support, maternity support, mental health support and theatre support-public consultation completed in January 2016 and awaiting outcome.

Up to date information on the progress of the developments on any of these standards for health occupations are available from Skills for Health at:

- http://www.skillsforhealth.org.uk/standards/item/324-healthcare-support-worker-trailblazer

Delivery of Apprenticeship StandardsIt is important that NHS organisations realise that once a standard is ready for delivery the training content, or as many employers refer to the ‘inputs’, need to be developed to ensure the requirements of the job role within that specific employer are covered. This content can be developed with the NHS employer’s preferred training provider.

The Education and Training Foundation has commissioned a series of programmes to support training providers in their preparations to deliver the new standards, improve teaching and learning within apprenticeships and engage with employers: Future Apprenticeships Support Programme. http://www.et-foundation.co.uk/supporting/support-practitioners/future-apprenticeships/

Each standard will be reviewed after 3 years.

B. Assessment PlanEach standard has an Assessment Plan that outlines what the measures will be to confirm competency within the job role.

End Point AssessmentUnlike current apprenticeship frameworks there will be an emphasis on ‘a rigorous’ End Point Assessment. This will vary according to what employer-led groups developing the standards have agreed. But in health standards this could include:

• A multiple choice/short answer test

10

• Observation in the workplace • A portfolio of evidence/reflective journal (not assessed already) and an interview • All candidates will have to have an end point assessment and not just a sample.

Employers must contract with a separate external provider who is registered on the Register of Apprenticeship Assessment Organisations to undertake the End Point Assessments the requirements of which are written within the Assessment Plan. This could be an Awarding Organisation for health related standards. The current Register of Apprentices Assessment Organisations can be accessed via:https://www.gov.uk/government/publications/register-of-apprentice-assessment-organisations Other Standards There are other standards being developed, some of which are ready for delivery that will be of interest for the NHS workforce. These include:

Accountancy; Ambulance Associate Practitioner, Bid and Proposal; Business (includes business administrator, payroll administrator); Construction (includes carpentry and joinery); Customer Service; Dental Health; Digital Industries; Education and Training (includes learning mentor); Electro-technical; Hospitality; Human Resources; Leadership and Management; Nursing, Ophthalmology; Pharmacy Services; Project Management; Property Services; Security.

Link to Published Standards:https://www.gov.uk/government/publications/apprenticeship-standards-list-of-occupations-availableLink to Standards In Development:https://www.gov.uk/government/publications/apprenticeship-standards-in-development

Information and developments are regularly updated within these links.

Where Trusts aren’t part of the development group for a standard they can influence the content via participating in the on-line consultation that is published when a standard is proposing to progress to the next stage of development. Registration via the following link will provide you alerts to this information and other updates on apprenticeship changes:https://public.govdelivery.com/accounts/UKGOVUK/subscriber/new?topic_id=UKGOVUK_1

Conclusion & Actions It is essential that your Chief Executive and Financial Director are aware of the implications of apprenticeship reform, in particular the levy and what plans your NHS organisation needs to do to develop Whole Workforce Plans that incorporate apprenticeships (ie not just bands 1-4). Forward thinking employers are recruiting project managers with expertise on apprenticeship reforms, including apprenticeship funding and workforce development. Does your Trust have the knowledge and capacity to take these reforms forward and maximise the levy?

Consider if your trust wants to become an Employer-Provider, (if not one already) and utilise the levy funding to deliver, for example, clinical apprenticeship qualifications within your own Trust or for a collection of trusts. Trusts need to develop the ‘inputs’ within the standards to ensure trusts have employees that are competent to deliver the required standard of patient care across all clinical and non-clinical roles. This

11

can be developed in conjunction with their selected training provider unless they are an employer provider.

Consider Completing the ROTO:https://www.gov.uk/government/collections/sfa-register-of-training-organisationsSubscribe to email alerts re apprenticeship reform updates:https://public.govdelivery.com/accounts/UKGOVUK/subscriber/new?topic_id=UKGOVUK_1

Produced by: Kay Butterfield, Associate Skills for HealthDawn Probert, Senior Consultant Skills for Health

12