Employers to fork out for a third of apprenticeship training as government tells bosses to pay providers for first time



Employers will be expected to pay a third of the provider costs for apprenticeship, it was announced today.

The new, employer-led funding model for the first Trailblazers’ group has been issued for apprentices starting on or before July 31 next year — and it has been set at a maximum of £2 from the public purse for every £1 from an employer.

It is believed to be the first time a mandatory cash contribution will have been required from apprentice employers.

A Skills Funding Agency spokesperson said: “Government will also provide extra funding for successful completion, to support businesses with less than 50 employees and for apprentices aged 16 to 18.”

The model has five bands into which apprenticeships would be placed, based on sector and estimate of size. Each band would have a funding limit.

For example, with the announced contribution percentages working out to around 67 per cent from government and 33 per cent from the employer, a £6,000 band would indicate £2,000 from an employer and £4,000 from government.

However, the government has said it wants employers to investigate the provider market and negotiate their own terms so that they might lower their own — and therefore the taxpayers’ — contribution.

The Department for Business, Innovation and Skills is expected to publish further detail, such as the value of the five bands, soon. The bands would not apply to English and maths, FE Week understands.

The government’s apprenticeship funding consultation document, issued in July last year, used a 70:30 ratio for “illustrative purposes only”.

Its example had a provider receiving £300 from an employer towards apprenticeship training. “The provider is therefore eligible to claim £700 for that apprentice,” it read.

Chris Banks, chair of the Learning & Skills Council (LSC) from 2004 to April 2010, suggested in an independent review published in summer 2010 that government and employers should contribute 50:50 to apprenticeships, but where training needed to be encouraged or to address market failure it could be 70:30.

The first Trailblazers are made up of leading large and small employers and professional bodies in the sectors of aerospace, automotive, digital industries, electrotechnical, energy and utilities, financial services, food and drink manufacturing and life sciences and industrial sciences.

The employers have been collaborating to design apprenticeships for occupations within their sector.

The second phase of Trailblazers was announced in March and involved employers from 29 sectors including accountancy, butchery, housing and rail design. Phase three Trailblazers are expected to be announced in September.

The government is yet to publish the results of its technical consultation on apprenticeship funding reform, issued on March 6, meaning that it is unclear how the Trailblazer pilots might be affected by the proposed PAYE and credit account systems.

For more detail and reaction to today’s apprenticeship funding announcement see edition 104 of FE Week (dated Monday, June2).

 



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6 Comments

  1. The success of the changes hinge on the nitty-gritty of this statement – A Skills Funding Agency spokesperson said: “Government will also provide extra funding for successful completion, to support businesses with less than 50 employees and for apprentices aged 16 to 18.”

  2. L thomas

    This will cut apprenticships for sme,s they just wont bother , what is this goverment thinking of . Some sme.s dont take £1,000 a week and so could never pay a third of the cost of an apprenticeship , at the present time an employer will take on apprentice , train them and start them off on a career ,now this will all go . Cant believe it .

    • Mr.Johnston

      Absolutely spot on L.Thomas. These changes will only work for large employers who have the requisite manpower to be able to a) ‘shop around for good deals with providers and b) manage the inevitable administration that will surely come out of this. This will drastically reduce the uptake for apprenticeships within the SME sector ( i.e. construction ) where 90% of firms are 5 or less employees.In terms of the costs to the nation, apprentices will achieve, become full time workers / employees and therefore contributors to the tax system so the government recoups the costanyway.The currrent Apprenticeship system isn’t broken so why try to fix it?

  3. About time too. For years employers have supposed to pay, providers have failed to collect anything, and apprenticeship delivery has been cheap but uncheerful .

    Say a post 19 apprenticeship is worth £5000 and the funding rules state, as they did, that the employer should pay half. All that happened was that the employer paid nothing and the provider simply delivered £2500 worth of apprenticeship.

    And then people said the apprenticeship brand was being devalued. I wonder why?

  4. Steve Healy

    I work for a construction college and if these changes come into force they will decimate intake for us. The employers just will not bother. Oh well.

  5. David Dodd

    I cannot see this working for SME’s. They are focussed on making profits and staying “alive”. They do not have the resources to administer the large amount of paperwork associated with running these programme. How is that going to be addressed?