The Association of Colleges has called for government proposals for apprenticeship funding reform to be “carefully modelled and trialled” over fears changes could create barriers and reduce quality.

In its response to a technical consultation on the proposals to use PAYE or a credits system to fund apprenticeship, it warned that not enough was known about how either system might function in practice.

The response said: “We recognise that the mechanisms offered are theoretically simple, but we have significant concerns that the approach to be adopted will not be fair and will provide an advantage to larger employers who are already involved in apprenticeships against smaller businesses and those new to the scheme.”

It was also concerned that putting employers in charge of paying for apprenticeship training could lead to a drop in quality.

The association’s response said: “It is difficult to predict precisely how price negotiations will work in practice, but BIS research strongly … suggests that apprenticeships will be price sensitive.

“If this proves to be the case there is a real risk that quality provision will be undercut by the cheapest offer.

“Even if such behaviour is short lived, it will impact adversely on apprentices and on some high quality providers who may well choose not to remain involved.”

The association recommended extensive pilots be carried out to explore the potential impact of the reforms on the system.

It said it believed that the reforms could lead to higher quality apprenticeships which met employer needs if they recognised the additional costs of smaller businesses and of working with younger apprentices.

The response said: “We do, however, continue to have serious reservations as to how government intends to implement these changes.

“We feel that the changes need to be carefully modelled and trialled to determine whether they will indeed support the intent.”

It added that the association did not believe the phase one trailblazers on their own would be enough.

“We would expect all pilot and transition activity to be evaluated to check whether it is better than the existing system,” it said.

“Without such an evaluation this will amount to a significant amount of change and expense for very little (if any) gain over the current arrangements.”