Government proposals on apprenticeships include one in which funding goes through employers. It’s a principle John Allan agrees with, but he thinks the options on the table still aren’t right.

The Federation of Small Businesses believes the best approach for apprenticeships would be a more demand-led system that ensures training is tailored to suit the needs of businesses.

The FSB has long said that the best way to make the system more effective is for government funding to be routed through employers rather than being paid directly to training providers.

The current apprenticeships system has been subjected to constant change which has undermined its brand and led to confusion.

While the current system is not ideal, it is vital not to rush into an imperfect solution. Indeed, detailed thought must be given to ways in which apprenticeship candidates, employers and training providers will be affected by any changes.

The FSB has said government must take its time with any reforms. It must think through the implementation in order to get it right first time and create a system that will last for decades to come.

Unfortunately, proposals laid out by government in the current consultation take a simplified view of apprenticeships. Furthermore, in their current form they appear to breach some of the key points we consider imperative to make this system work for small and micro businesses.

Proposals may potentially lead to a sudden and significant increase in costs which small and micro businesses cannot absorb”

Current proposals seem to suggest government aims for the employer to pay the full costs in advance of government payback.

The reality is many small businesses cannot afford to pay the full cost of the training upfront, even though some of it will be recovered. This would damage cash-flow and put small firms off engaging in the system.

We are also concerned that current proposals may potentially lead to a sudden and significant increase in costs which small and micro businesses cannot absorb.

Moreover, we are concerned about the proposals for payment on results. Small businesses are already left out of pocket if an apprenticeship ends prematurely, and payment on results could compound the financial pain felt by businesses in these circumstances.

Routing funding through employers should offer many long term benefits. It would make employers more involved in vocational education, and lead to providers being more businesslike and cost conscious.

We believe government must continue to be as generous as it currently is in its contribution towards apprenticeships, while also fully-funding the training element of apprenticeships for 16 to 19-year-olds. This group in particular can be seen as far riskier to take on for a small firm as they lack experience and skills of older apprentices.

Establishing government funding through the business puts the employer in charge and we believe that over time this will make them more engaged. The FSB believes they will have much more success at getting the training they want, rather than what a training provider can deliver cheaply.

To sum up, the FSB is a keen supporter of the principle of routing apprenticeship funding via employers. However, combining this change with a requirement to prefund providers and potentially increasing costs will reduce employer’s engagement in the apprenticeship programme.

We urge government to take its time with this proposal and ensure the best possible outcome, not just for the apprentice but for the small business too.


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