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Funding

Active IQ funding information and advice for skills providers

For providers in the further education and skills sector in England, understanding how education and training programmes are funded can often be daunting and difficult to comprehend. 

On the Skills Hub, we will provide you with a brief overview of the fundamentals of the funding landscape and system, and highlight the key differences between the funding of young people and adults in the different settings for learning. Our offer of webinars and blogs will provide regular updates on funding sources.

We will also provide guidance and advice on how you might access these sources of funding.

The Education and Skills Funding Agency (ESFA) brings together the former responsibilities of the Education Funding Agency (EFA) and the Skills Funding Agency (SFA) to create a single agency responsible for the funding of education and skills for children, young people and adults, in England.

In addition to overseeing £58 billion of funding for the education and training sector, the ESFA also regulates academies, further education and sixth-form colleges, and training providers, intervening where there is a risk of failure or where there is evidence of mismanagement of public funds.

In relation to young people aged 16 and over and adults of all ages, the ESFA funds learners studying nationally recognised qualifications, such as GCSEs and A-Levels, technical and vocational qualifications, including the new T Levels, and other learning aims that may not lead to nationally-recognised qualifications, i.e. non-regulated learning aims.

All learners must meet certain criteria to be eligible to be funded, e.g. residency in England, and the qualifications they undertake must also be eligible for funding.

The latest information on available qualifications, standards, apprenticeships, T levels and units can be found on Finding a Learning Aim. For example, the Active IQ Level 3 Diploma in Personal Training for Health, Fitness and Performance (601/9003/6) is eligible for funding for young people aged 16-19, for adults aged 19-23 as part of the legal entitlement, and for adults using an advanced learner loan to fund their learning.

For young people in maintained schools, academies, colleges, and other learning settings, the ESFA is responsible for the funding of their programmes of learning up to the age of 19, and for 19–25-year-old learners with learning difficulties and/or disabilities who have an Education, Health and Care Plan (EHCP).

Following Professor Wolf’s review of vocational education in 2011, programmes of learning for 16–19-year-olds known as study programmes were introduced.

Study programmes contain the following elements, depending on the learners’ start points and expected destinations:

  • Core programme of academic or vocational qualifications that stretch the learners and prepare them for progression to further study, employment or apprenticeships, e.g. Active IQ Level 2 Diploma in Health and Fitness (603/6348/4)
  • English and maths if the learners have not yet achieved these at GCSE grade 4 to 9
  • Tutorial, enrichment and other non-qualification activities to support their personal and character development
  • Work experience or industry placements to give learners the opportunity to develop work-related skills and broaden their career aspirations

The ESFA funds the whole of a study programme undertaken by a 16–19-year-old learner based on the total planned hours for all elements in an academic year, with an expectation that the average length of programme will be about 600 hours per year (more for the new T levels) for a full-time learner. For a 16 or 17-year-old on a study programme (not T level), the maximum funding band is 5 at a minimum of 540 annual planned hours and the national rate for that learner before any uplifts would be £4188. Higher band values ( 6 to 9) are attached to T level learners whose programmes are also planned to last two years.

For those learners who have not yet achieved GCSE English and maths grades 4 to 9, it is a condition of funding that the young person continues to study them up to achieving them at these grades. For some learners, Functional Skills qualifications in English and maths may be more appropriate.

Active IQ offers students short qualifications which can enrich their study programme and provide useful life skills, e.g. Level 2 Award in Mental Health Awareness, as well as enable progression into the active leisure sector, e.g. Active IQ Level 1 Award in Assisting Sport and Physical Activity Sessions (603/6347/2).

The latest rules and guidance for using 16 to 19 formula funding allocated by ESFA for 2020 to 2021 and 2021 to 2022 can be found on 16-19 education: funding guidance.

The funding rates and the formula used in the funding arrangements for 16 to 19-year-olds can be found at Funding guidance for young people 2021 to 2022: funding rates and formula.

In December 2021, the Department for Education announced that as part of the additional investment in 16-19 education promised in the most recent Spending Review, the base rate of funding for young people would be increased by 8.4% from August 2022. This means that the new rate of funding for a 16 or 17-year-old will be £4,542. There will also be additional funding for some high-cost and high-value programmes, e.g. nursing and transport operations, and for disadvantage uplifts.

The Adult Education Budget (AEB) funds education and training for learners aged 19 years and over. The AEB is managed by the Education and Skills Funding Agency (ESFA) outside of devolved areas, and by Mayoral Combined Authorities (MCAs) and the Greater London Authority (GLA) in devolved areas (for learners resident in these areas). The AEB funds a wide range of learning aims and programmes for adults, including nationally recognised qualifications, as well as quality assured non-qualification activities. The range extends to skills provision for the unemployed, workplace learning, traineeships, community learning and independent living skills.

Some of these form part of the fully funded national entitlements for adults aged 19-23 years who have not yet achieved the equivalent of 5 GCSEs (free level 2 offer) or 2 A levels (free level 3 offer), e.g. Active IQ Level 3 Extended Diploma in Personal Training for Health, Fitness and Performance (601/9002/4).

The extension of the free level 3 offer for adults from April 2021 meant that any adult aged 24 and over who wants to achieve their first full level 3 qualification, which is equivalent to a technical certificate or diploma, or 2 full A levels, has been able to access hundreds of fully funded courses in specific sector subject areas, e.g. engineering, construction, logistics, health and social care, science, ICT, hospitality and catering.

Adults who have not yet achieved GCSE English and maths at grade 4, and those who are assessed at below level 1 in Essential Digital Skills, are also entitled to study these without having to pay tuition fees. Unemployed learners of all ages and employed learners whose earnings fall below certain levels (low wage waiver) can also be fully funded for their learning.

Under AEB local flexibilities providers can offer adults bespoke locally designed learning, that can include both qualifications and non-regulated learning, to support progression to full level 2, to retrain and upskill learners already in receipt of level 2 or above, or, to refocus or restart a career if unemployed, e.g. Active IQ Level 2 Award in Instructing Circuit Sessions (603/6734/9).

Adult education budget (AEB) funding rules 2021 to 2022 set out the rules that apply to ESFA funded AEB for the 2021 to 2022 funding year.

AEB funding for qualifications or learning aims is determined by the ‘single activity matrix’ which measures their funding value in guided learning or total qualification hours and the programme weighting for the qualification, e.g. Active IQ Level 3 Diploma in Fitness Instructing and Physical Activity (603/1162/9) at £2,882.

Some qualifications have their funding values set as a matter of policy, e,g. GCSEs, A levels and Functional Skills. The programme weighting factors are determined by the cost per hour involved in delivering different qualifications. The majority of active leisure learning qualifications reflect the relatively low additional costs (PW=B) involved in delivering these qualifications.

Adult education budget (AEB): funding rates and formula 2021 to 2022 sets out details of the 2021 to 2022 funding system for the AEB and 16-18 traineeships.

From August 2019, Mayoral Combined Authorities (MCAs) and the Greater London Authority (GLA) have been given responsibility for funding adult education in their local areas, so the approach to this budget will now be based on each particular region’s education and training needs for learners aged 19 and over.

From 2019 to 2020 the AEB has been devolved to the following MCAs and through a delegation agreement to the Mayor of London for the Greater London Authority (GLA):

  • Greater Manchester
  • Liverpool City Region
  • West Midlands
  • Tees Valley
  • West of England
  • Cambridgeshire and Peterborough
  • Greater London
  • North of Tyne (2020 to 2021)
  • Sheffield City Region (2021 to 2022)
  • West Yorkshire (2021 to 2022)

Although the devolved areas apply the national funding rules, rates and formula in most part, they do have powers to set their own funding and performance management rules, e.g. GLA sets higher funding rates for English and maths qualifications and a higher threshold for the low wage waiver.

Devolved authorities can set their own priorities for skills development and reflect this in a range of procurement arrangements. If providers are delivering to eligible adults in a devolved area, they will have to manage separate contracts for nationally funded programmes such as traineeships or to residents living outside the devolved authority, and the devolved AEB.

Advanced learner loans are available to adults to meet the costs of tuition on a range of approved qualifications at levels 3 to 6. Individuals aged 19 and over on the first day of their learning aim are eligible for loans.

They are not means-tested and so remove a barrier to participation for adult learners. Learners are entitled to access up to four loans, which they can take out either one after the other or at the same time.

Where a provider accesses direct AEB funding to deliver a first full Level 3 qualification to a learner who is aged 19 to 23, or to a learner aged 24 and over under the level 3 adult offer, a learner cannot access a loan for the same qualification delivered at the same time.

The Student Loans Company pays the provider on a monthly basis for the individual learner as long as the learner is retained and the provider can also draw down additional support funding for the learner to cover costs of childcare or learning support from the loans bursary fund.

Active IQ offers several Level 3 qualifications that are approved for advanced learner loans, some examples of which are:

The advanced learner loans funding and performance management rules for the 2021 to 2022 funding year can be found at Advanced learner loans funding rules 2021 to 2022.

The rules apply to all providers of education and training who hold a loans facility and loans bursary fund agreement with the Education and Skills Funding Agency (ESFA). This agreement allows providers to receive loans payments from the Student Loans Company (SLC) on behalf of learners and loans bursary payments from ESFA.

An apprenticeship is a job with training. Through an apprenticeship, an apprentice will gain the technical knowledge, practical experience and wider skills and behaviours that they need for their immediate job and future career.

The apprentice gains this through formal off-the-job training (which is fundable by the government, provided both the individual and the programme can comply with these funding rules); and the opportunity to apply these new skills in a real work environment (in the productive job role) through on-the-job training, which is the responsibility of the apprentice’s employer.

Learners, whose employers decide to invest in their training and assessment, can be funded as apprentices as long as their training provider (or employer if they train their own staff) is on the Register of Apprenticeship Training Providers (RoATP).

Training providers who wish to offer apprenticeship training can choose one of three routes when they apply on the RoATP:

  • Main provider
  • Employer provider
  • Supporting provider

Note: up till 15 August 2021 the RoATP has been closed to new applicants other than for critical worker-linked provision but from 16 August 2021 this will no longer apply and the register will be open only to new providers that are able to fulfil a gap in provision identified by unmet employer demand.

Apprenticeship standards have been placed into one of 30 funding bands, with the upper limit of those bands ranging from £1500 to £27000, e.g. Personal Trainer is in band 6 with an upper limit of £4000. Employers negotiate a price for their apprentices’ training and assessment (including the cost of End-point Assessment) with the chosen training provider up to the upper limit.

Employers with annual pay bills of more than £3 million pay into a digital account which is then topped up by 10% by the government. Funds in digital accounts will expire after 24 months if unused.

Employers that do not pay the levy or do not have sufficient funds in their levy accounts need to contribute 5% of the training and assessment cost, the government pays the remaining 95%.

Since 1 August 2020, no new starts on apprenticeship frameworks have been funded, only standards.

For smaller employers who offer apprenticeships to young people, 100% of the funding is provided by the government and the government also pays providers for the delivery of English and maths required for completion of the standard, as well as learning support funding for apprentices with learning difficulties and/or disabilities.

From 1 April to 30 September 2021, as part of Covid-19 recovery measures, employers who take on new apprentices can receive incentive payments of £3000 per new start, irrespective of age.

The employer incentive payments were extended for new apprenticeship starts from 1 October 2021 to 31 January 2022.

The latest apprenticeship funding rules for 2021 to 2022 apply to apprenticeship starts between 1 August 2021 and 31 July 2022. There are different funding rules for different apprenticeship start dates. You must follow the funding rules that apply to each apprentice.

For the latest versions of the rules go to Apprenticeship funding rules.

The apprenticeship service offers employers and training providers an extensive range of services that promote and expand the apprenticeship provision.

You can watch very useful webinar recordings on the apprenticeship service’s YouTube channel Using the apprenticeship service – You Tube.

Traineeships are a national programme that provides 16 to 24-year-olds resident in England with the skills and work experience needed to progress into apprenticeships, employment and further learning.

The traineeship core offer includes the following mandatory elements:

  • work-preparation training e.g. CV writing, interview skills
  • substantial work-placement element, and
  • English, maths, ESOL or digital skills as necessary.

Providers can also offer a flexible element including technical and professional qualifications needed for the workplace.

Active IQ has developed its Active Leisure Traineeship offer to support the educational aspect of a traineeship programme. It covers Functional Skills (if required) and a work preparation qualification, designed as an introduction to professional and personal development in the active leisure sector, e.g. Active IQ Level 1 Certificate in Sport and Physical Activity (603/2783/2).

Some new flexibilities have been introduced more recently into the design of traineeships, e.g. duration extended to up to 12 months, level 3 learners are eligible, placements with more than one employer.

Young people aged 16-18 are funded on traineeships in the same way as other study programmes, depending on total planned hours for all the elements.

Adults aged 19-24 are funded by the AEB, with a single rate of £1500 per learner for the combined work preparation and placements element, and separate rates for the other elements, e.g. Active IQ Level 1 Certificate in Sport and Physical Activity (603/2783/2) at £1,417.

The ESFA continues to fund eligible individuals for the traineeship programme across England, including individuals resident in a devolved authority area.

The National Skills Fund is a new source of funding, over 5 years from 2019/20, mainly to fund adults who want to upskill or retrain, to meet the needs of a changing labour market. It has been extensively used to fund skills recovery measures in the aftermath of Covid-19, including Skills Bootcamps and the new lifetime skills guarantee. Skills Bootcamps target industry sectors with significant skills shortages as priorities and provide access to almost 400 free courses through Free Courses for Jobs. Currently, free level 3 courses of up to 16 weeks are available in engineering, construction, science, health and social care but as yet active leisure qualifications have not been prioritised for these.

The extension of the free level 3 offer for adults from April 2021 to those aged 24 and over although funded by the National Skills Fund is routed through the ESFA  AEB nationally or through the Mayoral Combined Authorities for residents living in those areas. A further extension of the free level 3 offer to adults who are unemployed or earning below the national minimum wage so that they can study these qualifications irrespective of any prior qualifications will come into effect from April 2022.

The Spending Review of November 2021 also confirmed the merger of the National Skills Fund and Adult Education Budget into a single skills fund by 2022-3, which should simplify funding administration (total of £1.8 billion after 2024/25).

Sector-based work academies (SWAPs) have been designed to help Jobcentre Plus claimants build their confidence and improve their job prospects, and help employers in sectors with vacancies fill them. Lasting up to 6 weeks, they consist of three elements:

  • Pre-employment training
  • Work experience placement
  • Guaranteed job interview

The AEB local flexibility funds pre-employment training, lasting 2-3 weeks, DWP funds other elements, including travel and childcare whilst on placement.

Under the Kickstart Scheme introduced in 2020, employers in the active leisure sector who offer six month-long high quality work placements to young people aged 16 to 24 on universal credit at risk of long term unemployment, can receive a subsidy of 100% of the minimum wage for 25 hours a week (plus NI and pension). Additionally, the employer can receive up to £1,500 per applicant to pay for set up and administration costs, plus any appropriate training. Despite disappointing take-up of this scheme, it has been extended into 2022. 

For education and training providers who are currently not in receipt of public funding for the programmes of learning they offer, this checklist may help.

  1. Make sure you meet the essential criteria and conditions in terms of getting approval to offer your learners nationally accredited qualifications. The team at Active IQ can help you with this process.
  2. Ensure you have the necessary quality assurance and management systems in place to monitor learner progress, provide management information and data to different users, and comply with audit and inspection requirements.
  3. Have a UK Provider Reference Number (UKPRN).
  4. Have a valid Information Commissioner’s Office registration number for education and training.
  5. Register on the ESFA e-tendering portal BRAVO or DfE e-tendering portal to receive information about procurement opportunities.
  6. Look out for alternative entry opportunities for new providers on GOV.UK, e.g. into Traineeships (Register of Training Organisations was decommissioned in July 2021).
  7. Consider a subcontracting arrangement initially with a main provider of AEB funded provision (total contract values of less than £100,000 for any, one main) to gain an understanding of how the funding system works.
  8. If intending to offer apprenticeship training, prepare an application for the Register of Apprenticeship Training Providers (RoATP), with assistance if needed, ready for when the Register reopens for new entrants.