Skills Minister Matthew Hancock has rejected calls for in-kind contributions towards apprenticeships to count as part of employers’ mandatory cash payments.

Mr Hancock re-affirmed his preference for mandatory cash contributions from employers after calls from the Confederation of British Industry (CBI) and the Association of Employment and Learning Providers (AELP)  for other elements to be taken into account.

He told delegates at day one (Monday, June 2) of the AELP annual conference that expecting bosses to play a greater role in designing apprenticeship frameworks and asking them to front up a third of the provider costs — with the government paying the rest — would help “deliver the skills employers need for their future”.

The figures are for a pilot employer-led funding model made up of five funding cap levels ranging from £3,000 to £27,000, with further public money, including extra cash for 16 to 18-year-old apprenticeships, potentially pushing the highest cap above £37,000.

But CBI skills director Neil Carberry told delegates that businesses wanted “co-investment not co-payment”, and used social media site Twitter to call for contributions other than cash to count towards the employer’s mandatory share of the cost.

He said: “We need the totality of an employer’s contribution taken into account, not just the cash —especially for the smallest.”

And an AELP spokesperson said: “Imposing mandatory cash contributions for all employers will mean that many employers will not engage with the programme. Contributions of all types should be encouraged and we should value non cash as highly as cash contributions.”

But when pressed on whether in-kind contributions should count, Mr Hancock said: “Of course there are wider costs to taking on apprentices, but those employers pay for what they value and value what they pay for.”

And Professor Alison Wolf, author of the 2011 report on vocational education, seemed to back the government, taking to Twitter to argue that in-kind contributions would be difficult to measure. She said: “Contributions ‘in-kind’, for anything,  are almost impossible to audit and very, very easy to list on a form.”

Mr Hancock told delegates: “If we call it co-investment and the substance is exactly the same, then I’m quite happy to take on board that proposition, and we will do a search of all our publications to change the word co-payment to co-investment if that helps.

“But on the substance of it, the reason why I’m such a strong supporter of co-investment is that the benefits of apprenticeships come to the apprentice themselves, to the employers and to the government. Under the existing system, many of the payments that we make to you [providers] are not known about by the employer.

“Many employers don’t know the value of training that you are providing and it’s very hard for us as the government to drive value for money directly because we have to do it through regulation which comes out of the other end of the sausage machine with bureaucracy.”

It is believed to be the first time a mandatory cash contribution will have been required from apprentice employers. It comes two years after a review of apprenticeships by former BBC Dragons’ Den investor Doug Richard recommended an employer-led system.

However, the government has not revealed how it will pay its share with the results of the latest consultation, which ended on May 1, proposing a PAYE or credit account system yet to be published.

But Mr Carberry told the conference the system had to be right for all businesses, big and small.

He said: “We want the right frameworks, they have to be relevant, particularly in apprenticeships’ case. We want the right structure, they have to be flexible, you have to live with the fact that businesses need to do business as well as change people for the long term. They have got to come at the right cost, and for us that has to mean co-investment, not co-payment.

“We are comfortable as an organisation with the idea that companies contribute to the apprenticeships they run, but that has to come on the basis that it makes sense to a company and co-investment has to be the principle we use.”