David Lockhart-Hawkins, Compliance Expert, Strategic Development Network (SDN)

Earlier this month the @ESFAgov announced it was to pause the start of any new routine funding audits for all post-16 providers for the short-term, as result of the COVID-19 pandemic.

Whilst this is welcome relief to apprenticeship providers who are dealing with changes in delivery models and furloughed staff and apprentices, this period in lockdown also provides an opportunity to reflect on your compliance practices, to be more certain of safeguard funding when normal business resumes.

SDN’s compliance expert, David Lockhart-Hawkins, tackles three compliance challenges that providers struggle with, offers advice on tracking apprentices during lockdown and details of a free webinar on 4 May to provide further support, but first… 

How has apprenticeship compliance changed in recent years?

Apprenticeship compliance has changed fundamentally since May 2017 when the funding methodology of levy and negotiable training price was implemented.

Before the apprenticeship reforms, being compliant mainly focused on demonstrating that apprentices were still in learning whilst on programme – existence and eligibility rather than suitability for that product.

However, over the last couple of years, the focus of compliance has become front-loaded i.e. Is the design of the apprenticeship compliant and is the programme a suitable funding route for the applicant learner, at the right price?

This means a particular emphasis is now placed on demonstrating that there is a need of learning, that you are only funding new knowledge, skills and behaviours and making sure that employers, apprentices (and taxpayers) are getting good value for money.

In effect, staying compliant now requires a greater degree of technical knowledge of the apprenticeship product, the funding rules, an ability to adapt individual programmes and be more thorough and transparent with the processes in place, to evidence the funding you are claiming is justifiable.

Over the last two years, SDN has supported dozens of apprenticeship training providers with their compliance assurance activity and it is rare to find providers that do not, in the first instance, have errors in their data.

This is usually linked to misunderstandings of apprenticeship funding methodology and the ability to interpret and make evidence-based decisions on the grey areas of the funding rules.

Below are the three main areas where errors occur…

1. The price breakdown conundrum

Many training providers sell their apprenticeship programmes to employers on a single value (usually the maximum funding band) and assume the end-point assessment (EPA) cost is a fixed percentage or value, when it isn’t until the employer agrees that price with their choice of End Point Assessment Organisation (EPAO).


You need to clearly agree your training price (cost of delivery and your margin) at start, and then the assessment price when known (actual cost agreed by employer with EPAO). We’ve seen too many instances of estimated assessment prices or values that are not accurate, leaving an overclaim and an employer potentially overcharged.

For example, if you quote a single price at the maximum funding band for a particular standard at £5,000 and assume EPA will cost 20% (£1,000), you are effectively saying that your training costs £4,000 to deliver. You have to put that on your Individualised Learner Record (ILR) as your training price. This means, if the employer chooses a different EPAO who delivers EPA at a lower cost than you had planned for (say £600 instead of £1,000), you have an EPA overclaim of £400.

Providers commonly think that this is an overclaim only at completion (or of the completion payment), but it isn’t. You get 80% of your training and assessment monies on the ILR split between start and planned end date. You’re claiming EPA monies on the day you input an assessment price on the ILR. If that value is wrong, you have an overclaim.

In summary, there is a real misunderstanding of training price and its relationship with assessment price. If the assessment price is lower, why would an employer agree for the training price to go up to reach your maximum funding band?

Providers need to be able to split the training price and assessment price, and articulate those split costs to employers, to make sure you do not overclaim. Many providers still do not realise you have to break down your training price to the employer into eligible cost categories.

2. Dual approach to initial assessment

It’s important that you have strong and effective compliance systems that work hand-in-hand with your quality systems – initial assessment is a good example of where compliance and quality should work in tandem, now more than ever.

Initial assessment is really the most important part of the apprenticeship journey. An apprentice must need at least 20% off-the-job training, across a minimum duration of a year, to be suitably funded as an apprentice. If you cannot evidence the suitability of your apprentice, then all funding is going to be at risk irrespective of where they are now in their journey.

You need to be sure that when you’re designing an initial assessment you are teasing out the level of knowledge, skills and behaviours an apprentice has already obtained prior to starting the apprenticeship, before amending the training programme to reflect this prior learning.

Modulising your programme is one good method to getting this right. This gives an apprentice a more tailored apprenticeship programme but will also mean adjusting the price when particular modules of learning are not needed or advising the applicant of other training routes if there isn’t enough learning activity to make them eligible for an apprenticeship.

Auditors rightly never accept the reasoning that, if an apprenticeship is the only funding route available to a provider, then the absence of their own delivered alternatives is why the applicant was put on the programme!

3. Planning off-the-job hours as part of curriculum development

Many apprenticeship providers do not yet have a sufficient understanding of the development hours (the off-the-job hours) an apprentice will receive within their curriculum, which makes it impossible to accurately identify what they need following initial assessment. This often creates ineffective planning and tracking mechanisms for off-the-job hours.

Tracking hours itself can be problematic if parties don’t understand what needs to be tracked. You might be asking apprentices to spend a large amount of time recording hours that could be obtained in a more streamlined way. Where apprentices don’t track their hours adequately or aren’t sure what to track, could give the impression they are not meeting the training requirements and potentially result in a funding clawback, though this is usually at the point of completion when it can’t be proven an apprentice has met the 20% requirement.

90% of the compliance challenge is about effectively designing an apprenticeship programme where you understand your curriculum, how the curriculum aligns to the apprenticeship standard, and the apprentice, employer and trainer all have clarity on what is required of them to progress through the programme.

What else to watch out for during lockdown?

Your compliance assurance process should adapt as the funding rules change, so that you are confident you are staying compliant. If your processes and procedures are in order, apprentices that are furloughed but continuing in training do not pose any specific funding risk. Engagement data and evidence is key.

You need to know the apprentice remains in learning in the funding period. Double-check you are tracking, and able to evidence, that the apprentice is engaging in learning whilst in lockdown. Using training software and digital platforms that require secure learner logins is a good way to identify which apprentices are continuing to engage in learning, and can help you quickly and easily assess who is disengaged and needs chasing up. (Though there have been relaxations announced on 24th April for signatures and several other rule amendment measures to help providers. These relaxations don’t yet feature in the funding rules documents but are now policy.)

The lockdown doesn’t relax the need to be compliant. Post-lockdown the need will also remain. If you can use this period to address some of your key compliance challenges evident pre-lockdown, through the design of your evidence system, now is a good time to review – before providers are able to resume their usual pattern of starts.

David Lockhart-Hawkins, Compliance Expert, Strategic Development Network (SDN)

David Lockhart Hawkins has developed a series of subject-based initial assessment and skills gap analysis templates to ensure apprentice suitability. Contact SDN for details.

Register here for the free webinar | 4th May 2020 | 12:30-13:15 | Staying compliant during COVID-19 changes to the ESFA’s apprenticeship funding rules

Hosted by SDN’s compliance specialist, David Lockhart-Hawkins, this free webinar session will give you an overview of the recent changes to the apprenticeship funding rules in response to COVID-19 and how providers can remain compliant. This webinar will cover:

  • Which apprenticeship funding rules have been relaxed, and how
  • Which key funding rules remain unchanged
  • How you, as a provider, will need to adapt to meet these changes
  • How to ensure limited disruption to your evidence gathering for the foreseeable future

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