Issue #1: UK Funding Models
It takes 2 to party, ugly ducklings, and how I'd start a company.
Welcome to The View—a weekly perspective on alternative education, EdTech startups, and European government funding routes.
The View is written by Gordon MacRae. Gordon is a 10-year veteran of the alternative education space, including leading education teams at General Assembly and Multiverse.
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He is now the founder of Track Changes, a research and advisory company focusing on alternative education, start-ups, and product teams.
Access to the UK apprenticeship levy remains a closed shop
The register lists all providers who, between them, have access to over £2.5bn in available apprenticeships funding.
New applicants have been unable to apply to the register since Covid hit in 2020: good news for the two leading providers in England, Multiverse and Corndel. These two training providers have placed almost 40% of the 18,150 digital apprentices who started a qualification in 2022 (see Fig 1.).
Figure 1. Number of digital apprentice places filled by the top five market leaders
Multiverse, founded by Euan Blair in 2016 as Whitehat, has by far the largest share of the market. The London-based provider placed 22% of new digital apprentices across the sector for the year to date1.
Multiverse and Corndel’s predominance is part of a wider trend across digital apprenticeships. Before 2019, legacy providers QA and Arch were the market leaders, offering broad, mass-market learning products. They achieved scale by being all things to all parties: offering the widest range of apprenticeships on the market. If you were an employer, they said, we can fill all your apprenticeships.
Corndel and Multiverse offered an alternative: specialised digital training, developed in partnership with employers, with a particular focus on software development and data training. The strategy has paid off. In the last few years, Arch ceded ground to the two market leaders; seeing their share of the market drop from a peak of 29% in 2018/19 to 15% in 2022.
Uncertainty in the apprenticeship market has benefitted Corndel and Multiverse. While apprentice starts have declined overall by 42% since 2016, starts for digital apprenticeships have increased by 17% in the same period. In 2022 alone, Corndel's data and software development programmes recorded between £6–7m in start date bookings, while Multiverse is on track to record over £20m.
Growth for both providers has come through new products built to teach data literacy - think teaching white-collar professionals to do basic data analysis and visualisation in Excel. Multiverse's "Data Literacy" course and Corndel's "Data-Driven Professional Programme" are both built on the "Level 3 Data Technician" standard2. Both programmes provide training on how to clean, analyse and visualise simple data, as well as how to influence and tell compelling stories using data: a broad market, particularly in today's economy.
As we can see from the chart below, a rough estimate of the value of this L3 programme to both providers is significant. Both providers have generated £2–3m in bookings in the last two years3.
Displacing either company looks like a tough ask for competing providers. New providers have few routes to access to the levy, after the UK government halted new applicants when Covid hit in 2020.
Since then, only a small number of new providers have been added - and only if those providers could prove their programmes were related to the Covid recovery plan. From a high of 856 new providers in 2017, only 19 new providers gained approval in the last 12 months.
Table 3. Providers approved on RoATP (2017–2022)
Since the list closed, both Multiverse and Corndel have raised significant capital, which should protect them from new competitors gaining a foothold, should the list open in the future. Multiverse announced $220 million in funding in June. While Corndel announced an undisclosed investment in 2020.
Higher Technical Qualifications
Higher technical education uptake is low in England. Only 10% of adults aged 18–65 hold an RFQ qualification at level 4 or 5 as their highest qualification, compared to 20% in Germany and 34% in Canada. Higher Technical Qualifications (HTQs) were introduced to change that situation. Launched to increase the number of learners participating in level 4 and 5 qualifications, HTQs align to the same RFQ standards as apprenticeships, skills bootcamps, and T Levels.
In many ways, HTQs are the ugly duckling of the apprenticeship levy. Employers fund apprenticeships through a payroll tax if their annual wage bill is £3m or more. It means 0.5% of an ameployer’s annual wage bill needs to be paid into the Apprenticeship Levy. The Levy is mandatory and employers can only use the funds to spend with a registered apprenticeship training provider. If the money isn’t spent after 2 years, it goes back to the government.
HTQs are funded by students, rather than employers. They work more like a traditional university loan and, to date, they have focused on niche technical skills.
This could change in the next 12 months. In July, the Department for Education opened applications for a £32 million fund aimed at HTQ enrolment. The upcoming launch of the Lifetime Loan Entitlement (LLE), will also increase access. The LLE will provide individuals with a loan entitlement of up to the equivalent of four years of free loans, allowing access to modules, short courses, higher technical qualifications, and other training outside the standard three (or four) year full-time undergraduate degree route.
And training providers could benefit. HTQ programme design aligns with the same standards as apprenticeships. In theory, providers can run a Data Analyst apprenticeship curriculum without needing to be on the apprenticeship levy, providing employers a route to teach ahead of an application to the apprenticeship levy, or to simply run their own, employer-vetted programme.
The fourth cycle of the HTQs approvals process will open on 8 May 2023 and close 30 June 2023.
B2G routes for EdTech
If I were starting an EdTech company in the UK, I'd build it around the IFATE standards. Why? Because of the money.
Granted, the Institute For Apprenticeships and Technical Education standards are pretty dry, but employer input on the competencies is strong. And you can guarantee that the knowledge, skills, and behaviours you teach are ones that companies want, rather than the latest buzzwords.
Companies also get a lot of freedom to design the curriculum based on the standards. The standards are vague, and this is on purpose. IFATE allows training providers to make key decisions on which tools and technologies they use.
And aligning to IFATE gives you access to a LOT of money.
Take apprenticeships, for example. The funding available through the apprenticeship levy in England was over £2.5bn in 2020, with around £80m available to teach digital skills. e.g. software development, data analytics, UX design, digital marketing, etc.
As mentioned before, access to the levy is tough. But there are opportunities to sub-contract with existing providers. As well as identifying gaps (e.g. cyber, VR, UX) in the existing provision. Or, for a provider with deep pockets, to acquire a provider already on the levy.
Additionally, providers not on the levy can access funding for skills bootcamps. Over £8m in government funding was available in 2022 for learning providers teaching digital skills. It's still a nascent initiative, with more funding likely in 2023. See also, HTQ funding as mentioned earlier.
Elsewhere, an IFATE-aligned curriculum gives you access to government tenders. UK Trade and Investment (UKTI) estimate that public sector ICT expenditure in the country is worth £18bn (out of a nationwide total of £140bn): one of the largest ICT expenditures in Europe.
These initiatives all need programmes designed against IFATE standards. I’m not looking to start a company but, if I was so inclined, it seems like a bright place to start if you're launching a new EdTech company in England.
Senior Learning Designer, Multiverse
Programme Manager - Skills Bootcamps, OpenClassrooms
Higher Technical Education Skills Injection Fund
The Growth Fund is now called the Skills Injection Fund. In July, the Department for Education opened the applications for the £32 million fund.
The DfE said the fund aims to create extra "capacity to grow and deliver high quality level 4/5 provision and HTQs”.
The funding is available for new occupational routes in digital, construction, health and science. For September 2023 or January 2024 delivery.
Skills Bootcamp Wave 3 providers
We're starting to hear which providers secured funding for Skills Bootcamps in Wave 3. Northcoders nabbed £4 million government funding to deliver software development training. Skills City has £3.5m to deliver Cyber training, while OpenClassrooms also secured an undisclosed amount of funding. I'm basing this on the fact they’re hiring a Programme Manager who will head up their “first large-scale government sponsored programme in England”. The initiative is in partnership with Gloucestershire College. £60m in overall funding was made available by DfE.
UK model for apprenticeships
As Sophie Ruddock commented on the recent EdTech Insiders podcast, many US companies look to the German and Swiss models of apprenticeships as the gold standard to replicate in the States. But this is a mistake, says Ruddock.
“The Swiss and German models have been around for centuries and it’s so embedded in their education system,” she says. “Vocational and academic routes are held in equal esteem. If we were to do this in the States it would require a total overhaul of the K-12 system.
“Because you need to have people select their route (vocational or academic) at age 14. If we want to create genuine pathways without requiring an overhaul of the entire system, the UK system is a better model for the States. As the choice happens post-high school and allows people to make that choice at age 18–20.”
Until next time.
Disclosure: I worked at WhiteHat/Multiverse from 2019–2021.
The UK standard framework runs from Level 2 to Level 7, with Level 2 being equivalent to GCSE’s (aged 16), Level 3 to A-Levels (aged 18), 4,5,6 & 7 to each of the years of a university degree (e.g. Level 4 = foundation year / first year of university; Level 7 = Masters degree).
Digital Marketing is included in the Multiverse table as the UK Government doesn’t provide data distinguished by standard at the framework level. Therefore, the estimated revenue is an average of the two standards.