Treasury, not DfE, holding up apprenticeship fee reduction

 

The Department for Education is waiting for the Treasury to let them announce a start date for when the 10 per cent employer co-investment will be halved, FE Week can reveal.

In his Budget speech in October, chancellor Philip Hammond announced that the contribution non-levy paying companies pay towards apprenticeship training would fall to 5 per cent.

Following this, the Treasury told FE Week the start date for the new policy would be April 2019, but quickly backtracked claiming this was a “misunderstanding”.

“Further details will be set out soon, including dates,” the spokesperson added.

More than four month later, no start date has been forthcoming leaving the sector frustrated, and concerns are growing that small businesses may be putting off taking on apprentices until the change is made.

In an interview with FE Week editor Nick Linford this week, apprenticeships and skills minister Anne Milton expressed her equal “frustration” at the delay, and said the Department for Education is waiting on the Treasury.

“I would love to make an announcement now,” she said.

“Sadly, with much of one’s life in government, one waits for her majesty’s Treasury to say when you can do these things. And so we are always to same instance in Treasury’s hands.”

Milton added: “I share frustrations of people who are trying to deliver apprenticeships, train apprentices and plan their business. Government is always quite slow to make decision on these things so I completely understand the frustrations and I share them.”

When asked why it was holding up the announcement almost five months after the Budget, the Treasury would only say: “We will be announcing the date in due course.”

The chancellor Philip Hammond is due to deliver his Spring Statement next Wednesday, where he will give an update on the country’s economic situation since October’s fiscal event. It is not clear if an announcement will be made then.

The decision to cut SME’s contribution by half was made as part of a “£695 million package to support apprenticeships”, and will only apply to new starters when the change comes into effect.

However, it is unclear if the contribution will also apply to levy-paying employers when their levy pot is empty.

The Association of Employment and Learning Providers had been heavily campaigning to scrap the rule altogether as it believes it puts SMEs off apprenticeships, and is the reason why starts have fallen so much since the introduction of the levy.

But Milton has argued that “a contribution from somebody is important, because it requires their buy-in to what they’re getting into”.