Business Secretary Vince Cable has exclusively confirmed to FE Week that the government is “dropping” the troubled 24+ advanced learning loans system for apprenticeships.

With just 404 applications in around seven months, he “accepted” the system had failed, but said non-apprentice FE loans would remain.

It comes just days after FE Week reported how the government was in behind-closed-doors talks about scrapping the system.

And Dr Cable, speaking after an event to launch the London Professional Apprenticeship (LPA) this morning, confirmed the end of apprenticeship FE loans.

He said: “The advanced learning loans system has taken off for non-apprenticeships, but for apprenticeships we accept it has not succeeded and we’re dropping it.

“Regulations have to be put through Parliament to conclude it [apprenticeship loans system], but we’ve accepted it didn’t work and there’s no shame in that, but it will continue with the non-apprenticeship learners.”

Latest figures, released last month, showed that of the 52,468 FE loan applications up to October 31, less than 1 per cent were for apprenticeships [click here for the FE Week FE loans guide].

The figure appeared well off target for the government forecasts of 25,000 applications for apprenticeship loans this academic year (by July 31, 2014).

The slow uptake has long-prompted concerns from the likes of the National Institute of Adult Continuing Education (Niace) and the Association of Employment and Learning Providers (AELP).

David Hughes, chief executive of Niace, said: “We have been calling this a ‘failed’ policy for some time and would like to congratulate the government for recognising this and accepting that they need to act, and to act swiftly.

“We are anxious to see the detail of the new proposals. Whatever is proposed, we are sure that the government, employers, learning providers and learners and their representatives will need to work together to understand the full implications of this policy and how best to take it forward.”

A spokesperson for the AELP said: “This is very welcome news for the apprenticeship programme. Ministers have long said that they want to see more progression within apprenticeships from level two to higher levels and the problem is that loans are acting as a barrier to adults who want to move on to an advanced or high apprenticeship.

“By removing the cost differentials between studying individual elements of an apprenticeship inside or outside a framework which loans had caused, an outright abolition or fundamental reform could also rid us of a major anomaly in the market that was benefiting no one.”

Teresa Frith, senior skills policy manager at the Association of Colleges, said: “We are pleased to see the Minister has listened to concerns that have been quite strongly expressed about the effect loans have had on the demand for 24+ apprenticeships. Our concerns now are how 24+ apprenticeships will be funded as we move towards the new-look system.

“The concept of an all-age apprenticeships system is a good thing but only if money has been made available.”

The National Union of Students (NUS) has also been a long-standing critic of the system. It said apprenticeships were effectively taking out loans to pay to work.

Toni Pearce, NUS president, said: “We have been committed to campaigning against the introduction of HE-styled loans for students in FE aged 24 and over studying at level three and above ever since this entirely wrong-headed proposal was first put forward.”

Chris Jones, chief executive of City & Guilds, said: “There were always concerns around 24+ loans, even before they were introduced.

“As we said in our response to the Autumn Statement, too much bureaucracy can be detrimental to the education system, and particularly where apprenticeships are concerned. This is just another example of where bureaucracy has had a negative impact on the system as a whole.

“What we need to see is stability. There have been so many changes and developments in policy of late. All this flip-flopping about with policies is damaging to our education system as a whole and, most importantly, damaging to our learners.”

Sally Hunt, University and College Union general secretary, said: “Forcing older people to take out huge loans to retrain was always going to be a barrier and the time has come for the government to scrap the scheme and provide proper financial support for people who wish to study for an apprenticeship.”

Dr Cable’s comments came at the London offices of PricewaterhouseCoopers (PwC), where the LPA was launched.

The programme is set to provide 250 apprenticeships to attract young Londoners into professional services roles. The LPA, developed by PwC, will receive £1.4m from the Department for Business, Innovation and Skills with PwC contributing £900,000.

Sara Caplan, PwC partner, said: “The LPA is a new way of learning for London to create the next generation of business people and the networks to support them in training and beyond. It’s specifically designed to open up career opportunities based on people’s potential to learn and employer’s drive to grow, and challenges traditional perceptions of who can access what opportunities.”

A recruitment drive aimed at apprentices will begin in the New Year, and more businesses will be encouraged to employ apprentices through the LPA. Small and medium-sized enterprises will be targeted.

**Skills Minister Matthew Hancock said: “While the newly available loans for FE have seen higher than expected demand, loans for apprenticeships have not seen high demand.

“With the confirmation of a new funding system for apprenticeships in the Autumn Statement, now is the right time to reinstate co-funding for all apprenticeships ahead of more fundamental reforms, details of which will be publicised in the new year.”