Employers to fork out for a third of apprenticeship training as government tells bosses to pay providers for first time

Employers will be expected to pay a third of the provider costs for apprenticeship, it was announced today.

The new, employer-led funding model for the first Trailblazers’ group has been issued for apprentices starting on or before July 31 next year — and it has been set at a maximum of £2 from the public purse for every £1 from an employer.

It is believed to be the first time a mandatory cash contribution will have been required from apprentice employers.

A Skills Funding Agency spokesperson said: “Government will also provide extra funding for successful completion, to support businesses with less than 50 employees and for apprentices aged 16 to 18.”

The model has five bands into which apprenticeships would be placed, based on sector and estimate of size. Each band would have a funding limit.

For example, with the announced contribution percentages working out to around 67 per cent from government and 33 per cent from the employer, a £6,000 band would indicate £2,000 from an employer and £4,000 from government.

However, the government has said it wants employers to investigate the provider market and negotiate their own terms so that they might lower their own — and therefore the taxpayers’ — contribution.

The Department for Business, Innovation and Skills is expected to publish further detail, such as the value of the five bands, soon. The bands would not apply to English and maths, FE Week understands.

The government’s apprenticeship funding consultation document, issued in July last year, used a 70:30 ratio for “illustrative purposes only”.

Its example had a provider receiving £300 from an employer towards apprenticeship training. “The provider is therefore eligible to claim £700 for that apprentice,” it read.

Chris Banks, chair of the Learning & Skills Council (LSC) from 2004 to April 2010, suggested in an independent review published in summer 2010 that government and employers should contribute 50:50 to apprenticeships, but where training needed to be encouraged or to address market failure it could be 70:30.

The first Trailblazers are made up of leading large and small employers and professional bodies in the sectors of aerospace, automotive, digital industries, electrotechnical, energy and utilities, financial services, food and drink manufacturing and life sciences and industrial sciences.

The employers have been collaborating to design apprenticeships for occupations within their sector.

The second phase of Trailblazers was announced in March and involved employers from 29 sectors including accountancy, butchery, housing and rail design. Phase three Trailblazers are expected to be announced in September.

The government is yet to publish the results of its technical consultation on apprenticeship funding reform, issued on March 6, meaning that it is unclear how the Trailblazer pilots might be affected by the proposed PAYE and credit account systems.

For more detail and reaction to today’s apprenticeship funding announcement see edition 104 of FE Week (dated Monday, June2).