Cheap means nasty for apprenticeship units, say providers

Labour’s flagship apprenticeship “units” risk stalling before they begin as training providers warn the courses are so underfunded they may refuse to run them.

Ministers this week published long-awaited funding rates for the first tranche of 10 units – short courses that will, for the first time, allow employers to spend levy money on non-apprenticeship training.

But training organisations said the rates, ranging from £22.80 to £27.10 an hour, fall well short of covering the real cost of delivery, fuelling claims the programme has been set up to fail.

One leader of a large apprenticeship firm described the rollout as a “spectacular mess”, warning that some of the courses were “not fit for purpose” and so poorly designed “it’s as if it’s been designed so that no one enrols on it”.

‘A compromise we will not make’

Seven of the units are in manufacturing and construction with delivery hours ranging from 35 to 140, while three are AI leadership courses of just 30 hours.

The units are for employees aged 19 and older who are looking to upskill. Starts can begin from Tuesday (April 28).

The Department for Work and Pensions said Skills England recommended funding rates using a “best estimate of costs”, with initial rates for units reflecting delivery expenses plus set-up and fixed learner costs such as onboarding and administration.

Ben Newbould, managing director of specialist tech provider Velocity Academy, said the proposed £750 funding rate for the level 5 AI units, which works out at just £25 per hour, is “wholly misaligned” with reality.

His own analysis, based on the AI strategy and opportunity unit, found 69 per cent of the content is lifted from the existing level 4 AI and automation apprenticeship standard, funded at £18,000 with a delivery rate of £42.86 per hour.

Applying a proper weighted model across the four standards used to build this new qualification, he said, puts the true cost of the unit closer to £39 or £40 per hour.

Velocity Academy is now “seriously considering not delivering these units”.

The only way to make them viable, Newbould warned, would be to cram learners into oversized classes, pushing the learner-to-trainer ratio beyond what is acceptable for high-quality teaching – “a compromise we will not make”.

Benjamin Silverstone, associate professor and head of skills policy and strategy at the University of Warwick’s WMG Skills Centre, was planning to deliver the AI units but said to be financially viable, the courses would require a “bigger cohort size than you are realistically going to fit into a room”.

He told FE Week it was “disappointing that there seems to be a lack of understanding of how much education actually costs” and added he felt providers were “not really consulted in terms of how much they would require financially to do this stuff”.

Jemma Perks, managing director of S&A Academy, said providers like hers support the “increased flexibility” apprenticeship units are supposed to bring. But she was also concerned the funding for AI leadership modules was “lower than we anticipated”, making it “challenging” to design and deliver programmes that meet the expected quality standards, especially given the need for specialist expertise and technical competence.

Without better alignment between funding and costs, she warned, provider uptake risks being “limited”, ultimately impacting employer access and development of technological skills.

Providers also raised that the design of the AI units does not match real workforce needs, which is hands-on AI capability, not leadership-only or policy-heavy provision.

Set up to fail

Apprenticeship units are a centrepiece of Labour’s rebranded “growth and skills levy”, promised by leader Keir Starmer in opposition to give businesses the “flexibility they need to train their workforce”.

Yet nearly two years after taking office, ministers are preparing to launch just 10 short courses that can be funded through apprenticeship levy contributions.

Since gaining power, ministers have found it difficult to flex the levy after realising England’s apprenticeship budget distributed by the Treasury is fully spent each year.

Despite now increasing the national annual budget to £3.3 billion, ministers have had to find savings, including by defunding level 7 apprenticeships for people aged over 21 and axing a range of popular management apprenticeships, to steer funding back to young people while also introducing their promised short course offer.

Silverstone said Labour’s promised short course growth and skills levy policy had “narrowed down massively” since inception.

He said ministers had made it so the policy “is technically doable, so you can’t accuse anyone of saying that opportunity has been taken away”, but the offer is “that unattractive” that it drives low take-up.

Another element of apprenticeship units that the sector fears will drive low interest is the payment model, whereby 70 per cent of the funding is withheld until the learner has completed all hours and passed a skills test.

The government has said it will keep the “affordability” of apprenticeship units “under review” and could withdraw a unit with just four weeks’ notice. Providers fear this “big stick” model leaves them exposed.

Ben Rowland, CEO of the Association of Employment and Learning Providers, said there was a “fundamental question” over whether the government actually wants the units to succeed.

If they do prove popular, he warned, “the system won’t be able to afford them”.

“Funding does not match the real-world cost of delivery, and the rules are too inflexible for providers and employers to make them viable. Taken together, the sum of the parts just doesn’t stack up,” Rowland added.

Saqib Bhatti, the Conservatives’ shadow education minister, said the reports were “immensely concerning” and reflected a broader pattern in which government rhetoric failed to meet reality. The units’ proposals, he argued, were “ill-thought-through and totally undeliverable”.

Risk worth taking?

Sam Callear, chief executive of GTA England, a network of not-for-profit training organisations, said his members support the concept of apprenticeship units and have ambitions to deliver them, but the planned system makes investment “a risky” decision.

He also highlighted that the mechanised welding unit, which requires expensive equipment, small classes and significant face-to-face teaching, is funded at a lower hourly rate than AI courses.

The manufacturing sector shares those concerns. Robert Halfon, former skills minister and now executive director of external affairs at Make UK, said funding levels were “lower than is comfortable for many providers” and warned the payment structure could make the units “unsustainable”.

Colleges are also proceeding cautiously. Blackpool and the Fylde College welcomed “any move” towards flexible, unit-based modules funded through the levy but said the rates were “less than we expected”, given the high costs of specialist staffing, facilities, consumables and compliance.

Yiannis Koursis, chief executive of The Bedford College Group, warned that low funding combined with delayed payments “raises concerns about the overall viability of delivering these units at scale”.

Not all providers are put off, however. Emma Barrett-Peel, chief executive of Train’d Up, said her organisation had received “lots of interest already” from their engineering and manufacturing employers who were “excited about widening their training offer to staff who were not suited to full apprenticeship programmes”.

“At this stage we believe we can design something high-quality. However, through the process over the coming weeks and months we will definitely keep the cost to deliver in our minds to make sure before we launch we are confident that the training is as good as our apprenticeship training,” she added.

Rowland pointed out that the government had described this as a “test and learn” phase for apprenticeship units. He said if ministers want to give the short courses a “genuine chance of success”, they must “find a way to control budgets without suppressing funding rates to the point where delivery becomes unworkable – otherwise, there is a real risk a good idea never proves its value”.

A DWP spokesperson said: “This government is committed to addressing skills gaps identified in the jobs market, which is why apprenticeship units have been introduced for priority sectors.

“The funding rates for the apprenticeship units are based on the expected cost of delivery.”