Apprenticeship units funding model is ‘stacked against providers’ 

Training providers have warned the apprenticeship units funding model is “not a winning formula” and could choke off delivery before it begins.

Draft funding rules for the new short courses set to be paid for through the reformed growth and skills levy from next month show funding will be heavily end-loaded and paid on two milestones to providers.

The first 30 per cent of the funding band will be paid once the learner has completed 30 per cent of the planned delivery hours. The second milestone payment will come once the learner has completed all hours and passed their skills test.

It means a provider that delivers 90 per cent of planned hours when a learner drops out risks receiving just 30 per cent of the funding.

On top of this, the Department for Work and Pensions said it would keep the “affordability” of apprenticeship units “under review” and could withdraw a unit with just four weeks’ notice.

Providers fear the model leaves them exposed and could dampen their appetite for involvement.

Simon Ashworth, deputy CEO and director of policy of the Association of Employment and Learning Providers, said: “As it stands, the methodology places significantly more risk on providers, with funding heavily end-loaded so providers absorb the upfront costs of delivery. This will create real cashflow pressures.”

He added that despite skills minister Jacqui Smith telling FE Week there was no cap on the amount of levy funding employers could spend on new apprenticeship units, the “reference in the small print to DWP being able to withdraw funding with just four weeks’ notice effectively acts as a backstop”.

“Taken together, this is not a winning formula,” he warned.

High risk, low reward

The government confirmed this week that from next month, apprenticeship units would be available for delivery in seven areas: AI leadership, electric vehicle charging point installation and maintenance, electrical fitting and assembly, mechanical fitting and assembly, permanent modular building assembly, solar PV installation, and maintenance and welding.

The content for apprenticeship units comes from the knowledge and skills from existing apprenticeship occupational standards “needed to address specific critical skills gaps”.

Units will be restricted to employed learners aged 19 or older and involve 30 to 140 hours of training, delivered over one to 16 weeks. Learners will need to pass a “skills test” at the end of their course, delivered by their training provider and validated by their employer, with independent assessment being an option.

Initial delivery will be restricted to a “targeted group” of existing apprenticeship providers that already show “strong performance” in the occupational standards linked to the units.

Funding bands and delivery hours for individual units are still being tested with “critical stakeholders”, but should be confirmed from April 1.

Robert Halfon, former skills minister and now executive director of external affairs at manufacturing giant Make UK, welcomed the “strong focus on critical engineering and manufacturing skills” such as welding, fitting and assembly in the newly announced apprenticeship units.

However, he added that the approach to funding their delivery “must be sustainable for training providers, otherwise employers will find themselves once again unable to access training they want to invest in”.

“Too often, the problem that employers encounter with the skills system is a lack of local provider capacity to deliver the training they need,” Halfon told FE Week.

“A funding model that makes it too risky for providers to deliver apprenticeship units only deepens this problem if it means there is little appetite to offer the courses. Providers need to be backed with the right funding from this new flexibility in the growth and skills levy to ensure that they can offer the right training in the right places.”

Ashworth warned that without a meaningful level of funding to incentivise delivery, it is “hard to see strong take-up”.

“It is now for government to demonstrate whether these new products have real substance or risk being superficial,” he added.

A DWP spokesperson said: “These apprenticeship units will offer employers more flexibility to upskill their staff while addressing the nation’s skills shortage.

“As part of their introduction, consultations will be held with employers and providers.”