Event exhibitors. Apprenticeship reform with SFA final funding and provider register. Headline sponsor. Exhibitors

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1 Headline sponsor Apprenticeship reform with SFA final funding and provider register 4 November, 2016 Event exhibitors Headline sponsor Exhibitors Headline sponsor Visit for funding workshops 1

2 Agenda Welcome and introduction to apprenticeship funding reforms Nick Linford, author of the Complete Guide to Funding Apprenticeships Levy funding for small and large employers final details Una Bennett, Funding Mechanism Deputy Director at the SFA Break for refreshments Extended Q&A on the funding reforms Una Bennett, Funding Mechanism Deputy Director at the SFA Break for lunch Using technology to harvest the opportunities from apprentice reforms Fiona Hudson-Kelly, CEO at Smart Assessor Applying to become a registered apprenticeship provider ( market entry ) Una Bennett, Funding Mechanism Deputy Director at the SFA Modelling the impact of the new levy system Nick Linford 15:30 End What four? 1. Four years so far In June 2012 Doug Richard was asked by the government to review apprenticeship content and funding 2. Four skills ministers so far John Hayes Matt Hancock took over Sept 2012 Nick Boles took over July 2014 Robert Halfon Took over July Four consultations so far (no going back) Closed September Visit for funding workshops 2

3 4. Key changes (no point pretending it s simple) 1. All frameworks to be replaced by standards Key changes: Standards are being designed by employer groups, require an end-point-assessment and often don t require any qualifications. Frameworks being switched off in phases through to 2019/ National funding formula replaced by negotiated rates Key changes: For apprentice starts from 1 May 2017 the SFA will no longer determine apprentice funding values using listed rates. Instead, providers and employers can negotiate a level of subsidy within one of 15 upper limits (from 1,500 to 27,000). 3. Extra 1bn for apprenticeships via a levy Key changes: From April employers will pay an extra 0.5% of their payroll above 3m into their levy pot. It s expected this will generate 2.5bn per year for England by 2019/20 and providers will access this pot via a new Digital Apprenticeship System. 4. A 90% subsidy when the employer levy pot is empty Key changes: If an employer has no levy pot (98% of employers) or it runs out, the SFA are paying 90% of the negotiated rate on condition the employer has paid 10% in cash first and that provider has an allocation. In the pilot, running since 2014, the subsidy is 67% if 33% paid first (concern over size of mandatory cash contribution). What s the reform really for? Reforms intended to be the solution to the problem of a lack of employer demand Employer demand will go up as will be in the driving seat and have ownership of: > The content & assessment (standards) > The funding (levy, fees and negotiation) > The oversight (Institute for Apprenticeships) But not everyone is convinced an employer owned model is compatible with supporting the young and social justice And not everyone is convinced a 3m starts target is compatible with a commitment to high quality Visit for funding workshops 3

4 Did you know? Apprenticeship Funding Una Bennett Deputy Director November 2016 Visit for funding workshops 4

5 What I will cover The apprenticeship levy Use of levy funds Apprenticeship funding including changes Contracting arrangements Using the digital apprenticeship service What is the apprenticeship levy and who pays it? Starts on 6 April 2017, at a rate of 0.5% of pay bill, paid through PAYE Applies to all UK employers in all sectors 15,000 allowance is not a cash payment Only 1.3% of employers will pay the levy Visit for funding workshops 5

6 Paying the levy Employers pay their levy to HMRC, through the PAYE process Single employers with multiple PAYE schemes will only have one allowance. Connected employers share one allowance LEVIED EMPLOYER Employer of 250 employees, each with a gross salary of 20,000. Pay bill: 250 x 20,000 = 5,000,000 Levy sum: 0.5% x 5,000,000 = 25,000 Allowance: 25,000 15,000 = 10,000 annual levy payment NON LEVIED EMPLOYER Employer of 100 employees, each with a gross salary of 20,000. Pay bill: 100 x 20,000 = 2,000,000 Levy sum: 0.5% x 2,000,000 = 10,000 Allowance: 10,000 15,000 = 0 annual levy payment Accessing levy funds to spend on training Levy funds will be available through a new digital service on gov.uk First funds appear in account in late May 2017 How funds in the account will be calculated If 100% of pay bill is in England If 80% of pay bill is in England 100% of levy payment in digital account 80% of levy payment in digital account 10% government top up to monthly funds entering an account Visit for funding workshops 6

7 What about non levy payers? Co Investment There are two types of employers who will benefit from government support towards the cost of their apprenticeships training: 1. Employers who haven t paid the levy and want to purchase apprenticeship training from a provider 2. A levy paying employer who with insufficient funds in their digital account to pay for the cost of training and assessment they want to purchase The government will pay 90% of the costs of training and assessment. The employer will be responsible for paying 10% of the costs. Purchasing training Apprenticeships started before 1 May will be funded through to completion according to the existing rules New funding system comes into effect on 1 May 2017 The cost will be spread over the lifetime of the apprenticeship. We will hold back 20% of the total cost, to be paid on completion of the apprenticeship. Levied employers buying training from May 2017 Can commit to apprenticeship starts from the beginning of May Funds will automatically leave the digital account on a monthly basis Non levied employers buying training from May 2017 Continue to make payments direct to providers Move onto the digital system at a later date Visit for funding workshops 7

8 What can funds be used for? Digital funds and government funding can be used for: apprenticeship training and assessment against an approved framework or standard with an approved training provider and assessment organisation up to the funding band maximum for that apprenticeship Digital funds and government funding can not be used for wages travel and subsistence costs managerial costs traineeships work placement programmes the costs of setting up an apprenticeship programme Key changes Proposals in August Expiry of digital funds after 18 months Support for year old apprentices 1000 payment to employers and training providers Final funding policy Extended to 24 months helping employers to prepare for the new system and to adapt training programmes. Retaining the 1000 payments plus extra government funding to provide a transitional 20% uplift for providers training year olds on a framework. Also applies to year olds formerly in care or with an Education, Health and Care plan. Removal of disadvantage uplift Retain a simplified version of current system for frameworks for one year to support those from disadvantaged areas whilst review best way to support disadvantaged groups. Visit for funding workshops 8

9 Funding bands Number Band limit 1 1, , , , , , , , , , , , , , ,000 Every apprenticeship will be placed in a funding band The upper limit of each funding band will cap the maximum: amount of digital funds an employer who pays the levy can use towards an individual apprenticeship. that government will co invest towards, where an employer does not pay the levy or has insufficient digital Employers can negotiate the best price for the training they require If employers want to spend more than the funding band limit, using their own money, then they will be free to do that. Funding bands do not have a lower limit. Funding bands for frameworks We will allocate each individual framework pathway to: the nearest funding band based on the current rate of funding the government pays providers for training adult apprentices but with some extra support uplift STEM Support Additional support in areas of disadvantage Transitional support of 20% of funding band maximum paid directly to training providers Also applies to year olds formerly in care or have Education and Health Care plan For all STEM framework pathways we will increase the current government funded adult rate by 40% at Level 2 and 80% at Level 3 and above, and then allocate these frameworks to the nearest funding band. Training providers receive: An additional 600 for training an apprentice from top 10% of deprived areas, 300 for next 10% range and 200 for the next 7% range 18 Visit for funding workshops 9

10 Funding bands for standards Principles Lower cost standards should be allocated to the nearest funding band Those standards currently assigned to the widest and highest cost funding band will be allocated to a new band within this range. Taking into account: Actual prices employers have negotiated with providers. Evidence from Trailblazer employers on the estimated costs eligible apprenticeship training The funding bands set for equivalent frameworks The level and nature of the training, and consistency across similar types of apprenticeship standard. Additional support year olds Government will pay to employers, and a further to training providers if they train a year old apprentice Disadvantaged young people Government will pay to employers, and a further to training providers if they train year olds leaving care or who have a Local Authority Education and Healthcare plan Small Employers Employers with fewer than 50 employees will have 100% of the training and assessment costs covered when training a year old (or year old formerly in care or has a Local Authority Education, Health and Care plan Additional learning support We will pay training providers up to 150 a month to support these learners, plus additional costs based on evidenced need English and Maths training To meet minimum standards of English and maths we will pay training providers 471 for each of these qualifications (Level 1 and 2) Visit for funding workshops 10

11 Funding rules Cross border funding Applying a single test for funding through the English system: based on whether the apprentice s main place of employment is England. Workplace is where the apprentice is expected to spend the majority of their time during their apprenticeship. Transferring funding During 2018 we will introduce means for employers to transfer up to 10% of the levy funds to another employer with a digital account, or to an ATA. Prior qualifications Now and in the future, you can train any individual to undertake an apprenticeship at a higher level than a qualification they already hold. From May 2017, an individual can be funded to undertake an apprenticeship at the same or lower level to acquire substantive new skills New employer steering group to design this system so that it meets their needs Contracting Once you have been selected by an employer to deliver training to their apprentices, you will need to negotiate costs and ensure contracts are in place so that the funding can flow. The costs for any end point assessment will be included in the total price for the apprenticeship you agree with the employer. You will be required to pass this agreed amount on to the assessment organisation selected by the employer. Visit for funding workshops 11

12 Working with employers with a digital account Employer A Employer B (C, D, E ) Skills Funding Agency Provider Agreement Apprenticeships employer A Apprenticeships employer B (C, D, E ) All providers need to be listed on the Register of Apprenticeship Training Providers Contract for Service Provider Payment contract Subcontractor, if selected Contract for Service End point assessment organisation (standards only) Working with employers without a digital account Employer End point assessment organisation (standards only) Skills Funding Agency Contract for service Provider Contract for Service Subcontractor, if selected Any provider wishing to work with employers who do not pay the levy must: be listed on the Register of Apprenticeship Training Providers and have successfully completed an invitation to tender to work with employers that do not pay the levy Visit for funding workshops 12

13 Key milestones 2016 October Publish funding bands that apply in the new system Full set of technical rules that underpin the funding system Calculation for English proportion Pilot testing with employers Register of Apprenticeship Training Providers open November December Further employer guidance from HMRC on how to calculate and pay the apprenticeship levy Key milestones 2017 and on January Employers to register on the digital apprenticeship service February March National Apprenticeship Week (6 to 10 March) April Levy paid May Service live Make levy commitments To 2020 All employers to use the service Visit for funding workshops 13

14 Key publications Apprenticeship funding: how it will work Apprenticeship funding and performance management rules 2017 to 2018 Feedback on the draft rules Apprenticeship employer provider guide Funding bands Estimate my apprenticeship funding tool Working with the SFA as an apprenticeship training provider ILR specification 2016 to 2017 Find apprenticeship training Visit for funding workshops 14

15 What is the digital apprenticeship service? 30 National Apprenticeship Service Visit for funding workshops 15

16 What is the digital apprenticeship service? 31 National Apprenticeship Service What is the digital apprenticeship service? 32 National Apprenticeship Service Visit for funding workshops 16

17 Visit for funding workshops 17

18 Recruit an apprentice Visit for funding workshops 18

19 Visit for funding workshops 19

20 gateway.gov.uk Visit for funding workshops 20

21 Visit for funding workshops 21

22 Visit for funding workshops 22

23 Visit for funding workshops 23

24 Using technology to harvest the opportunities from apprentice reforms. Using technology to harvest the opportunities from apprentice reforms. Visit for funding workshops 24

25 Using technology to harvest the opportunities from apprentice reforms. Using technology to harvest the opportunities from apprentice reforms. Visit for funding workshops 25

26 Using technology to harvest the opportunities from apprentice reforms. Using technology to harvest the opportunities from apprentice reforms. Visit for funding workshops 26

27 Using technology to harvest the opportunities from apprentice reforms. Using technology to harvest the opportunities from apprentice reforms. Visit for funding workshops 27

28 Using technology to harvest the opportunities from apprentice reforms. Using technology to harvest the opportunities from apprentice reforms. Visit for funding workshops 28

29 Using technology to harvest the opportunities from apprentice reforms. Using technology to harvest the opportunities from apprentice reforms. Visit for funding workshops 29

30 The Register of Apprenticeship Training Providers October 2016 Content purpose application routes interested in applying application process next steps and timeline. Visit for funding workshops 30

31 From proposal to policy Proposals in August Final policy All organisations must apply to the register of apprenticeship training organisations (RoATP). Any subcontractor delivering less than 100,000 of training per year is not required to apply to the RoATP. Main provider must always deliver a significant majority of each framework or standard they contract with the employer to deliver. Parent guarantees not accepted Main providers must directly provide training for each employer s apprenticeship programme that they deliver. Parent company guarantees accepted for one year. Purpose Entry route for organisations that want to deliver apprenticeship training Provide assurance to employers and government Allow employers who wish to deliver training to their own employees to do so Register of Apprenticeship Training Providers Sets a high bar for providers to meet if they want to deliver apprenticeship training Visit for funding workshops 31

32 Application routes There are three application routes to facilitate delivery of apprenticeship training. You can only apply for one route Main Application Route Employer Provider Route Supporting Route Apply for one route only Main application route The main application route is for organisations that: want to directly deliver any value of apprenticeship training want to be eligible for selection through the digital apprenticeship service are a levied employer and want to train staff in their own supply chain or apprentices in other organisations have the capacity and capability to deliver most of the frameworks and standards that they offer want to participate in the SFA procurement for delivery of apprenticeship training to employers that will not have a digital account to pay for apprenticeship training Visit for funding workshops 32

33 Employer provider route The employer provider route is for levy paying employers that: want to provide training to their own staff want to act as a subcontractor to their appointed main provider, delivering training to their own staff. Organisations that apply to this route cannot: deliver apprenticeship training to other organisations, including their supply chain. If you plan to deliver less than 100k as a subcontractor then you are not required to apply Supporting route The supporting route is for organisations that: want to deliver as a subcontractor only are new to the apprenticeship market do not have the capacity to be a main provider. Organisations that apply to this route cannot: deliver more than 500,000 of training per year deliver apprenticeship training directly to employers. If you plan to deliver less than 100k as a subcontractor then you are not required to apply Visit for funding workshops 33

34 Interested in applying? will you be delivering apprenticeship training? have you been trading as a business for at least three months? have you been awarded an Ofsted grade 4 for your effectiveness of apprenticeship provision within the last three years? have you been awarded an Ofsted grade 4 for your overall effectiveness within the last three years? have you completed the financial health self assessment and scored at least a satisfactory? Interested in applying? Familiarise yourself with the Joining the Register of Apprenticeship Training Providers application instructions to learn more about our requirements registrations you need to undertake UKRLP and Bravo on line application route Visit for funding workshops 34

35 Application overview Register with UKRLP To obtain a UKPRN to include on your application. Register with ICO Register with information commissioners Office (ICO) for education and training. Register for an account on the bravo e-tendering portal Read the registration guidance on our website. Complete your application Read Joining the Register of Apprenticeship Training Providers application instructions to help you. Ensure you sense check your application and upload the right information. Application Due diligence: we capture and verify your organisation details you self declare against our mandatory and discretionary exclusion criteria compliance questions. Visit for funding workshops 35

36 Application Financial health: upload a self assessment toolkit some organisations exempt from submitting financial statements most organisations must populate the toolkit with their latest financial information and upload their latest financial statements organisations graded as satisfactory, good or outstanding will pass our financial health assessment. Application Capacity and capability to deliver that you should consider: how you will ensure safeguarding of apprentices the PREVENT strategy how equality and diversity is built into your processes and policies details of your apprenticeship training offer including the expertise of your staff and ability to meet the needs of an apprentice. Visit for funding workshops 36

37 Common mistakes when making an application Not reading our Joining the Register of Apprenticeship Training Providers application instructions Failing to upload financial statements if not exempt. Not proof reading an application. Not fully answering questions that require a written answer. Not allowing enough time to complete an application. Next steps Be mindful of the deadline. Sense check your application. Check contact details on the e-tendering portal. Visit for funding workshops 37

38 Digital apprenticeship service Main apprenticeship route: the course directory portal review your information visible to employers on the course directory portal. Timeline Open for Applications 25 October 2016 SFA Evaluates Applications Nov Feb Publication of RoATP March 2017 October November December January February March April May June July July 25 November 2016 Close for Applications Launch of RoATP March 2017 Feedback to Applicants May 2017 Delivery can begin Visit for funding workshops 38

39 Further information Register of apprenticeship training providers webpage ofapprenticeship training providers Joining the Register of Apprenticeship Training Providers application instructions financial health self assessment toolkit guidance to access the e tendering portal and application questions information on the procurement is available on contracts finder Invitation to tender Apprenticeship training delivery for employers not using the digital account October 2016 Visit for funding workshops 39

40 Content background objective process overview specification questionnaire and funding/volume what you must not do and common mistakes timeline next steps Background The way government funds apprenticeships in England is changing ITT is for delivery of apprenticeship training to employers that will not be using the digital apprenticeship service digital account Public Contracts Regulations 2015 light touch regime Those successful in the ITT will be awarded a contract for services with the SFA Procurement is for new apprenticeship starts only, from May 2017 Visit for funding workshops 40

41 Objective This procurement will support government ambition to: Increase the number of apprenticeships Supply quality training that modern economy needs Have coverage across sectors, levels and England Offer a wide range of apprenticeship standards, and frameworks that have not yet been replaced It is important that those successful are able to, and willing to, flexibly meet the evolving needs of smaller employers. Procurement process overview If you are interested in taking part in the procurement you must: Complete PQQ Main Route (RoATP) Read the specification for this procurement Fully complete and submit the invitation to tender for the procurement specification questionnaire funding and volumes spreadsheet Complete all the above by 5.00pm on 25 November 2016 Visit for funding workshops 41

42 Specification questionnaire What applicants will need to demonstrate/consider: 1. Readiness to deliver from the contract commencement date 2. Track record 3. Management, reporting and quality assurance 4. Engaging with and meeting the needs of employers 5. Delivery of wider apprenticeship training support for employers and their apprentices 6. A comprehensive plan for the delivery of the Service Evaluation of specification questionnaire Fully meets requirements Meets most requirements Partially meets requirements Fails to meet requirements / no answer provided Visit for funding workshops 42

43 Evaluation criteria table Criteria Related question Maximum available score Minimum acceptable score Readiness to deliver Track record of delivering the Service Management, reporting and quality assurance Engaging with and meeting the needs of employers Delivery of wider apprenticeship training support for employers and their apprentices Delivery plan Funding and volumes This is an Excel spreadsheet where we ask for: Number of apprenticeship starts you will offer Estimated delivery costs Estimated additional costs Sector subject areas and levels Regions you plan to deliver in Visit for funding workshops 43

44 Funding and volumes To help you complete the spreadsheet you should consider the following: Guidance tab in the spreadsheet Document: Apprenticeship funding in England from May ceship funding from may 2017 What applicants must not do Seek help, assistance or opinions from SFA or DfE staff on the procurement process, outside of the support provided on the e tendering portal message board Submit a partially completed ITT Leave any queries to the last minute Attempt to submit the ITT after the deadline Visit for funding workshops 44

45 Common mistakes made Not reading the specification Failing to upload all requested documentation Not addressing all areas in the specification questionnaire Applications are not proof read Leaving your application to the last minute Contracts Minimum initial contract award is 100,000 Maximum initial contract award is 5,000,000 We will not award more than 100% of your turnover Organisations without financial track record have further limits in place Visit for funding workshops 45

46 Procurement timeline Activity Deadline Publication of ITT 25 October 2016 Applicant briefing by narrated presentation From 25 October 2016 Last day to send clarification messages on the e-tendering portal 5pm on 23 November 2016 PQQ 28910: Main Route - Register of Apprenticeship Training Providers closes 5pm on 25 November 2016 ITT : Apprenticeship training delivery for employers not using the digital account closes 5pm on 25 November 2016 Notification of tender results 14 March 2017 Day 1 of mandatory standstill period 14 March 2017 Day 10 of mandatory standstill period 24 March 2017 Contracts issued from 31 March 2017 Delivery commences 01 May 2017 Next steps Contracts finder de91 4f5d bf83 1fbf3d401e61 Bravo e tendering portal guidance ment_data/file/562651/roatp_etendering_portal_guidance_october_2016.pdf Ensure you have read the requirements and if you have any queries please use the Bravo message board and you will receive a response within 72 hours. Visit for funding workshops 46

47 Headline sponsor Modelling the impact of the new levy system Calculating funding for apprenticeships > There are now three funding methodologies 1. Framework starts before 1 st May 2017 Listed rates unchanged from 2012/13, with 20% for achievement, double payment in month one and variations for: delivery location; disadvantage; age at start; size of employer and no mandatory employer cash contribution. 2. Standards starts before 1 st May 2017 Pilot upper limits worth 2/3 rd of provider income with mandatory employer cash contribution (1/3 rd ) substantial employer incentives for 16-18, small employers and end-point assessment achievement 3. Framework and standards starts from 1 st May upper limits worth 100% for levied employers based on negotiation up to the upper limit, 100% of upper limit for SMEs with 16-18s from SFA else negotiated upper limit for non-levied employers split 10% employer cash payment and 90% SFA. Visit for funding workshops 47

48 1. Apprenticeship funding formula (per qual) BR x PW x DU x ACU x Discounts = Base rate Cash rate listed on LARS for fully-funded based on 12/13 SLN & National Funding Rate (NFR) NFR 2, NFR 2, NFR 2, is 7.23% more than % less than Programme Weighting Weighting for sector type, listed on LARS PW Weighting A (Base) 1 B (Low) 1.12 C (Medium) 1.3 D (High) 1.6 E (appren only) 1.72 G (Specialist) 1.72/1.92 H (appren only) 1.2 J (appren only) 1.25 K (appren only) 1.5 L (appren only) 1.15 Disadvantage uplift Weighting based on learner home postcode in the ILR. Could be as much as 32% (1.32) extra in most deprived area. When planning use a historical average Area cost uplift A south east (mainly London) weighting based on main delivery location. E.g. Up to 20% (1.2) extra if delivered in central London Co-funding & employer discounts 19+ cofunding means the funding is halved (0.5) 19+ large employer (1000+ employees) discount reduces funding by a further 25% (0.75) Funding 80% for monthly onprogramme payments (double in month one) 20% for achievement of Eng and Maths and rest when fully achieved framework 2. Standards pilot funding (full cap) DfE or BIS payments via SFA Provider income Funding cap band Core Gov Contribution (CGC) [max] 2,000 3,000 6,000 8,000 13,000 18, employer incentive [fixed] ,800 2,400 3,900 5,400 Small employer incentive [fixed] ,200 1,950 2,700 Completion employer incentive [fixed] ,200 1,950 2,700 Maximum total government contribution 3,600 4,900 9,600 12,800 20,800 28,800 Employer contribution for training and assessment (to achieve max cap) 1,500 3,000 4,000 6,500 9,000 Core Government Contribution (CGC) 2,000 3,000 6,000 8,000 8,000 18,000 Co payment' : Provider income (excluding Eng & 471 each) 3,000 4,500 9,000 12,000 14,500 27,000 Total employer incentives Employer contribution greater than fee? Large employer (50+ staff) with completed 19+ keeps Large employer (50+ staff) with completed keeps Small employer (<50 staff) with completed 19+ keeps Small employer (<50 staff) with completed keeps Net cost to large employer (50+ staff) with completed 19+ Net cost to large employer (50+ staff) with completed Net cost to small employer (<50 staff) with completed 19+ Net cost to small employer (<50 staff) with completed ,200 1,950 2,700 1,100 1,400 2,700 3,600 5,850 8,100 1,800 2,400 3,900 5,400 1,600 1,900 3,600 4,800 7,800 10, ,100 2,800 4,550 6, ,200 1,600 2,600 3, ,300 1,800 Visit for funding workshops 48

49 3. Levy funding for all starts from 1 May 2017 Number Band limit Non-levied fee (10%) employer incentive provider incentive (standards) provider incentive (frameworks) 1 1, , , , , , , , , , , , , , , ,200 1,500 1,800 2,100 2,400 2,700 1,300 1,400 1,500 1,600 1,700 1,800 2,000 2,200 2,800 3,400 4,000 4,600 5,200 5,800 6,400 Simplified Disadvantage uplift for frameworks (up to 600 per apprentice) English & 471 each Comparing framework funding for 1 May starts example (provisional and final) Visit for funding workshops 49

50 Comparing framework funding for 1 May starts 19+ example (final) Three things to note when modelling frameworks > Modelling old and new world for frameworks not easy as compares complicated old with simple(ish) new but with an assumed rate at the upper band > STEM subjects better funded from 1 May assuming you aren t currently charging employers > The highest priority apprentices now (youngest and living in most disadvantaged area) typically sees funding percentage fall furthest -perverse but true Visit for funding workshops 50

51 Opportunities?: watch and predict trends 12% All age all level apprenticeships starts % that are in management frameworks 10% 8% 6% 4% 2% 0% Management is 3 rd most popular apprenticeship Headline sponsor Final Q&A Visit for funding workshops 51

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