New funding model pilot

Proposed funding model update

Following two rounds of public consultation, and testing, The Institute for Apprenticeships and Technical Education (IfATE) commenced the piloting of a new funding methodology in January 2022. This proposed funding model (PFM) was intended to be piloted for a period of 12 months. 

In September 2022, IfATE published a consultation summary report and response document  which captures stakeholder feedback to the second consultation and IfATE’s response to that feedback. The report sets out the key themes raised in consultation responses and provides an overview of the decisions which IfATE had made about the main features of the PFM.

Since the publication of this document in September 2022, we have continued to refine and iterate the PFM. These changes do not stray from the key decisions made in response to the second consultation but bring subtle enhancements and efficiencies to the model, based on our findings and feedback from stakeholders and participants. In some areas they amend the evidence and submission requirements for Trailblazers who will utilise the new model. To date we have made changes to the:

Published guidance

• provided further clarity about how we will calculate the typical tutor salary, and modified our approach to the evidence we expect from Trailblazers who seek an adjustment to IfATE's best estimate of typical tutor salary costs
• provided further clarity about how we will calculate the maximum contribution towards eligible provider ‘on-costs’ 
• provided further information about how we will seek expert insight to inform the funding development, moderation, and verification process
• provided further information about how we will make our recommendation, where the Trailblazer is unable to evidence higher costs within the required timeframe

Data collection tools

• refined the tools provided to Trailblazer groups to support the high quality submission of funding information
• made steps towards integration for funding development within the Apprenticeship Builder system, which we intend to implement by the end of 2023

Contextual information to inform Secretary of State (SoS) decision making 

• refined the process for communicating our recommendation and any wider contextual information to the SoS, and their delegates, to inform decision making

Annexed to this note are full details of the changes that have been made to the PFM guidance and requirements since we published our consultation summary report and response document in September 2022. 

Model fixed-rates

We continue to work towards undertaking a review of the fixed-rates of the proposed funding model. This work will inform any future changes to our proposed funding model’s fixed-rates and will help to ensure that IfATE’s funding band recommendations to DfE are robust

Pilot extension and evaluation

We have made the decision to extend our pilot by an additional 3 months. This extension to the pilot period will increase our understanding of the PFM by increasing the diversity of apprenticeship funding bands recommended by sector, level, and duration. 

We intend to publish further details, including a pilot summary, in May 2023. After this point, and subject to final decisions being at the conclusion of the pilot period, trailblazer groups will continue to be required to follow the new funding band allocation model.

Annex – Full details of changes to the proposed funding model requirements and guidance

How we will calculate the typical tutor salary 

Where our best estimate has been adjusted in line with published criteria for Trailblazer supplied evidence, we will calculate the typical salary using a 37 hour working week and a 52 week salaried year. We will use the lowest verified typical training delivery salary cost identified to make this calculation.

How we will calculate the maximum contribution towards eligible provider ‘on-costs’

Provider ‘on-cost’: Combines the legal minimum employer pension contribution of 3% for their employees with the typical employer National Insurance contribution 15.05%

New funding model calculation and explanation of rates

How we expect Trailblazers to evidence typical tutor salaries when seeking an adjustment to IfATE's best estimate of typical tutor salary costs

Category 1 

• independent sector evidence of typical training delivery salary costs, for example a sector body report, economic report, academic paper etc 

Category 2 (one from below) 

a. Two paid invoices for tutor services relevant to the occupation from different training providers, from the last 12 months.

b. Anonymised PAYE data for gross salary paid to two individual occupationally relevant tutors from different training providers, from the last 12 months. 

c. One paid invoice for tutor services relevant to the occupation, and anonymised PAYE data for gross salary for one occupationally relevant tutor. Each piece of evidence should come from a different training organisation, from the last 12 months 

Category 3 (only if you can reasonably demonstrate why evidence category 1 cannot be met) 

• wage information from three regions of England: in the form of advertised vacancies for the occupation from the last 6 months 

Where evidence of typical salary costs to meet the required evidence categories does not exist, for example for niche or new occupations, and where genuine reasonable effort has not discovered all the required evidence, you should talk to us so that we can look at how a funding band recommendation can be made using the known available evidence.

How we will seek expert insight to inform the funding development, moderation, and verification process

We may arrange for a peer reviewer to provide expert comment on the training costs associated with your apprenticeship. The peer reviewer is chosen for their experience of the occupation or sector in which the occupation is found. You and the Route Panel will receive a summary of their comments. 

In some cases, we will not seek advice from a peer reviewer. For example, where we already have adequate information to make a recommendation or where there is not a suitable peer reviewer

How we will make our recommendation, where the Trailblazer is unable to evidence higher costs within the required timeframe

You will be invited to submit any additional evidence before we make a funding band recommendation. You must inform us of your intention to submit additional evidence within 10 working days. You will then have a further 10 working days to submit this additional evidence. We may agree to allow you additional time if you request it. 

In the absence of the information being provided within our prescribed timeframe we will proceed to making a funding band recommendation using the typical costs identified by IfATE.

Proposed funding model guidance.

In January 2023 IfATE provided an update on the funding pilot. This included a summary of iterations to requirements and guidance, based on our findings and feedback from stakeholders and participants, and the timeline for pilot conclusion and evaluation.

In September 2022, IfATE published a consultation summary report which captures stakeholder feedback to the second consultation. The report captures the key themes raised in consultation responses and provides an overview of the main features of the new funding model pilot.

The key change the Institute has made to the model presented during the most recent consultation is to remove the initial rates-based estimate from the proposed new approach.

This means that, in every instance, the trailblazer group will need to provide specific, defined information on various aspects of the individual apprenticeship being considered.

This change was made following direct stakeholder feedback on the need for the model to allow for bespoke inputs for every apprenticeship. The Institute also believes that the removal of the initial rates-based estimate of the approach will strengthen transparency and provide a clearer and simpler process for employers and other stakeholders.

• Allocating a funding band page

The consultation update noted that the Institute planned to publish a full consultation response in parallel with the outputs from the testing work and the conclusion of Education and Skills Funding Agency (ESFA)’s review of funding eligibility which was launched that same month.

Whilst the Institute’s impact testing work concluded in autumn 2021, ESFA’s review of funding eligibility remains ongoing and, as such, the Institute will not be publishing the full consultation summary report until later in 2022. The report will include a summary of the piloting phase and set out the outcomes of testing.

The ESFA’s review of funding eligibility may still have an impact in the future on what is or isn’t eligible for consideration as part of ongoing funding band recommendations. It remains, however, out of scope for the Institute’s work on designing a new approach for making funding band recommendations. Any subsequent changes that are made to the funding rules will be reflected in the respective calculations of the new model.

The Institute published a consultation update document in December 2020 which outlined the key themes from responses.

• Link to consultation update

In August 2020, the model was refined to take on board the feedback received to the consultation and it was decided to launch a second consultation on a revised ‘hybrid’ model combining a rates-based approach with a trailblazer-input approach.

To support the consultation, the Institute published a narrated presentation to set out the key elements of the proposed new funding model. The funding consultation proposed changes walk-through can be found on YouTube.

Similarly, this second consultation also generated a good level of feedback, with the topic of eligible costs consistently appearing in responses. Respondents continued to refer to ESFA’s funding rules and ineligible costs which fall outside of funding. In response to feedback and general engagement more widely across the sector, the ESFA agreed to take stock of their funding rules eligibility position and their review is ongoing.

• Link to second consultation document

In February 2020, the Institute launched a consultation on proposed changes to the funding band recommendation process and set out plans to use a rates-based model to generate funding bands. The consultation generated a large response rate across the sector with respondents expressing support for a system that would allow TBs to provide specific information to allow funding bands to reflect more nuanced costs and that a new model needs to accurately capture consumables costs to reflect variation.

• Link to first consultation document
• Link to first consultation summary report