Halfon should ask the Treasury to hand back the savings and fully-fund younger apprentices

This evening three national newspapers have reported our apprenticeship funding analysis along with a letter to the Skills Minister signed by over 50 MPs. FE Week editor, Nick Linford, explains how we’ve ended up here and suggests the Treasury should hand back some of the £1.5bn apprenticeship savings in order to fully-fund 16 to 18-year-old apprentices.

For the benefit of those that struggle with understanding further education policies, let’s first talk about schools. Imagine the Government decided they didn’t want to pay for school sixth forms. Instead, the Treasury will take back all their £22bn and instead fund through a new tax on the top two per cent wealthiest parents in the UK.

Then imagine the Government announces a ‘simple’ way for all parents in England to spend the tax collected via negotiating with the school’s sixth form, pupil by pupil, the price to teach them. There is no consultation about the level of this ‘simple’ price, which does not include the current extra funding for both pupils in deprived areas and school sixth forms located where staff and land costs more.

The ‘simple’ price chosen is a much lower rate, more than 50 per cent less than the current rate and because price negotiation between parent and school is now required a parent will often pay even less.

The Government defend the much lower price by saying it makes it ‘simple’ for parents.

They also point out that the new parent tax for the 2 per cent wealthiest means more money overall for school sixth forms, the poorest parents won’t have to pay at all and there is a £1,000 per pupil incentive paid to the parent and the school.

Finally, imagine FE Week crunched the numbers and found this ‘simple’ solution to the pricing issue meant schools were facing per pupil funding cuts of between 30 and 50 per cent, even assuming the parents pay the upper limit of the new ‘simple’ price.

Now repeat the paragraphs above but delete the word imagine and replace the words ‘schools sixth forms’ with ‘colleges and training providers’, ‘£22bn’ with ‘£1.5bn’, ‘tax’ with ‘levy’, ‘parents’ with ’employers’, ‘pupils’ with ‘apprentices’, ‘wealthiest’ with ‘largest’ and ‘poorest’ with ‘smallest’. Then you have a paragraph which represents what the government are introducing next May.

Its truly shocking. Just imagine Theresa May even considering a ‘simple’ school formula that cut per pupil funding in every school sixth form by even a single percentage point, let alone double digits. It. Would. Not. Happen.

The Treasury will make a £1.5bn annual saving by switching the total source of apprenticeship funding to an employer levy. Perhaps half of that £1.5bn saving could be used to improve social mobility by fully-funding 16 to 18-year-old apprentices?

We shared our analysis with several MPs, which resulted in the shadow skills minister Gordon Marsden and a former HE minister David Lammy separately writing to the Skills Minister Robert Halfon. The matter has now begun to receive national attention with news reports so far in The Guardian, Independent and Mirror.

Halfon is new in post and is probably being advised to ignore complaints about rate cuts from the Labour Party and training providers. But can he afford to ignore employers, those that these reforms are meant to be putting ‘in the driving seat’?

What does the Institute of the Motor Industry think, which includes BMW and Bentley Motors on their board? Well last week, on their website under the headline “new apprentice funding arrangements are car crash says IMI” their chief executive said: “These proposed funding levels will leave some vital apprenticeships with up to 50% less funding.  Employers around the country will struggle to get training places for their apprentices under this system”

Hopefully Halfon will at least listen to employers and bring some of his celebrated campaigning skills to the task, like those he used to battle his own government from the backbenches over fuel duty increases and hospital car parking charges.

Where will the extra money come from? Well, the Treasury will make a £1.5bn annual saving by switching the total source of apprenticeship funding to an employer levy. Perhaps half of this £1.5bn saving could be used to improve social mobility by fully-funding 16 to 18-year-old apprentices?

So Mr Halfon, let’s not allow this to be a ‘car crash’ for social mobility, just a temporary hole in the road that you can persuade Theresa May and your old friends at the Treasury to fill.

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  1. I totally agree with Nick’s analysis. There is no rationale behind this thinking on more cost cutting and what this will do is discriminate those wishing to follow an apprenticeship in socially deprived areas even more. We will see providers shut down due to having to fight those that see this as an opportunity to undercut rates to get the business, which will itself see quality of provision reduced, leading to the apprenticeship programme facing a very difficult future to succeed. I hope the government have a rethink on this whole restructure sooner rather than later!!

  2. Proper funding for our 16-18 year olds at their most vulnerable age when stepping into the world of work is vital. If we ignore or play down the importance of getting this age group into industry we will reap the problems for decades to come. As a private training provider we have 28 centres across the UK for 16-18’s to attend and an Oftsed Grade 1 rated Apprenticeship programme to support their next steps into work. We feel passionately about good quality training and giving our young people the best start but the costs involved will not be met with the proposed funding. This short term economising will inevitably produce long term issues for poorly trained workers and disgruntled employers.

  3. As providers we will stop supporting 16-18 year olds. They need far more resource and investment and it makes no commercial sense to support this age group on the same funding rates as a 19+ learner. There will only be one consequence of this move – 16-18 year old apprenticeship numbers falling off a cliff face. Its not rocket science.

  4. Apprenticeships were designed with vocational learning at their heart. Allowing micro business (Hairdressers, Florists, Electricians, Plumbers etc.) to take on young people and help them to develop skills/a trade for life.
    With the funding cuts these young people are being forced into pathways that don’t suit them and don’t bring out the best in them. The move to complete end assessment will leave those young people that struggle in academic setting and have anxiety issues to be left floundering and the funding isn’t there to support them, especially if they need to go through the end assessment more than once (and if you look at the pass rate for driving tests, which include both theory and practical end assessments, that would indicate that a large number wont pass first time!).
    The move to include employers more in the design of apprenticeships makes sense but whilst using this as the drive for change it seems to have been with the total exclusion of learners as the cost.
    If this goes ahead as planned and the funding is cut so drastically it will be a very sad day for our young people and for business.

  5. A McMillan

    I imagine that the experience of cycling would be greatly simplified by removing the gears, the brakes and the seat. That doesn’t necessarily mean that it’s a good idea.

    I totally get that they want to make the system as simple as possible for employers, and I think it needs to be to ensure that the employers get on board. However bulldozing through complicated, but necessary, funding arrangements in the name of simplicity is very short sighted.

    Mr. Haflon’s response seems to miss the point entirely. Claiming that increasing the amount invested in the system equals “more money on average per apprenticeship”, whilst correct, does nothing to allay the concerns. If you remove funding for 16-18 year olds and hugely increase funding for 24+ (which make up the majority of apprentices), of course you’re going to increase the average spend on each apprenticeship. You’re still cutting 16-18 funding.

    The second part of his quote discusses the incentives for employers to take on 16-18 learners – and that’s great – but completely fails to acknowledge the fairly large disincentives providers now face for taking on these same learners.

    The government have to rethink this, there is simply no way the proposals can be used as they are now.

  6. The raising of the participation age should surely mean that all routes post key stage 4 should receive the same level of support from the State?! When a student leaves school and attends a College or a Provider on a full time vocational course they are fully funded in recognition of the fact that they have no vocational skills. This whole system of employer contribution for 16-18 year olds and reduced funding rates will only steer more young people and employers away from Apprenticeships!

    As a parent, what would you do if your child had an apprenticeship and the employer chose the cheapest possible training? I’d just send mine back to school for a properly funded education!