Funding reform study finds employers unaware of apprenticeship costs

Government research on apprenticeship funding reform proposals has found that employers were generally in the dark about how much cash their providers got for training.

As the Department for Business, Innovation and Skills looks at rerouting apprenticeship funding directly through employers so they can pay for training, its research found that most were unable to even suggest a price.

“Where they were able to provide a price it tended to be much lower than the current level of funding provided by government,” according to the research paper.

“And when presented with the actual amount of funding the providers received they were unable to gauge whether this represented a fair price.”

Thirty nine “semi-structured” interviews were conducted for the study across five industrial sectors: engineering, construction, retailing, hospitality, and financial services.

It looked at how employers might react to apprenticeship funding reforms outlined in the 2012 review carried out by former Dragon’s Den investor Richard Review.

His suggested models were for “direct payment”, where businesses register apprentices and report claims for government funding through a new online system, with government funding then paid directly into their bank account; and “PAYE payment”, where businesses again register apprentices through a new online system and then recover government funding through their PAYE return.

He also suggested “provider payment”, where registered providers make claims for government funding when they have received the employer’s financial contribution.

“The suggestion is that the price of training would no longer be set by government. In future, the price providers charge would be determined by negotiation between providers and employers,” it said in the research paper.

But, it added: “Employers were split on whether or not they wanted funding routed through them.

“Some welcomed the idea because it would allow them to obtain greater influence over the provider.

“This was not in order to influence the content, delivery and assessment of apprenticeships — as noted above most felt they had the influence they wanted — rather, it was to ensure that the quality of service provided to the employer met the standard they wanted.

“Other employers were resistant to the idea of funding being routed through them because of concerns over the amount of administration involved, concerns about the complexity of any system which may be introduced, and the risk of reputational damage should something inadvertently go wrong in managing public money.”

The paper also said that employers, “in general were satisfied with the amount of influence they had over the content, structure, and assessment of the training which comprised the apprenticeship.”

“They were not actively looking to increase the amount of influence they had over these features of the apprenticeship,” it said.

The research paper continued: “Relatively few were dissatisfied with the way training was delivered or the structure of the training.

“Some specific points mentioned by employers included: feeling that the training providers were sometimes more reactive than proactive in meeting their needs; training providers being located some distance from the business; training providers placing too much emphasis on signing-up of apprentices rather than the delivery of the training; and. training providers not providing the flexibility employers required.

It also looked at how much funding might come from employers.

“The tipping point at which employers will substantially reduce their engagement in apprenticeships lies between 20 and 50 per cent contribution,” it said in the research paper

“From the discussion with employers this feels as if it will be nearer 20 than 50 per cent. Where the cap on public funding should be set is difficult to assess since employers had little knowledge of the costs faced by providers and what would constitute a fair price for the services they provide.”