When the Institute for Apprenticeships launched in 2017, its staff faced a complicated, opaque funding band system.
Funding managers moderated providers’ quotes using formulas, rate cards and the funding rules to reach a figure the Department for Education took as its best estimate of delivery costs. The effort was significant, but outside the organisation the reasoning was poorly understood.
The Institute for Apprenticeships and Technical Education then found a better way and, after two formal public consultations, produced the system in use today.
Now Skills England are remaking the model, and whilst I wouldn’t advocate another two consultations, government would do well to revisit what they uncovered, what the current system does well, and address a couple of things it did not.
Be very wary of losing transparency
A key expectation was that decisions be transparent and the “working out” shared. The opaque system meant most funding bands were formally challenged through independent re-review, which was adversarial and time-consuming to administer.
The current system, to my knowledge, has yet to face a single procedural review. IfATE went from the majority having appeals to none. They understood the decisions and could see why they had been reached, even if not everyone was happy.
Government must retain that openness and explain its decisions clearly. Stakeholders will appreciate it even when they disagree.
Anchoring in the costs of delivery is vital
Respondents were clear that apprenticeship funding should derive from the actual costs of delivery, which vary wildly across a diverse suite of apprenticeships, hence the sophisticated calculation that emerged.
There seems to be an intention for future bands to reflect broader economic and political priorities, rather than simply estimating delivery costs.
That isn’t unreasonable, but the best estimate of delivery costs must remain a vital data point. The final figure can move up or down, but anchoring to that cost-based position matters for stakeholder understanding and success.
Keep employers involved
Skills England also has ambitions for a more data-driven, automated calculation. That is reasonable; greater automation was always an aspiration for the current model, and it would ease its burden on employers.
But the consultations showed, and the current model demonstrates well, the value of keeping employers involved in judging viability.
Through trailblazer and route panel groups, employers could raise points a data-only model could never fully appreciate.
Only that real-life experience gives the full picture, so every new calculation must be scrutinised by employers.
The interim guidance frequently uses “may” when talking about engagement with employers and expert groups. That isn’t sufficient for me, and I think it should be a requirement.
Addressing inflation versus stability
Since the current model was designed, various events have shaken our economy and driven inflation, particularly raw material and energy costs. Many providers have felt this, engineering and manufacturing especially, where delivery costs rise year-on-year while funding bands stay stagnant.
There is no in-built mechanism to monitor and address inflation, which is a flaw in the current system, though it is one area where automated intervention could add the greatest value.
I don’t personally think annual reviews of all bands are viable or optimal – there is value in consistency – but automatically moving an apprenticeship up a band once inflation pushes it there would be a welcome improvement.
Properly supporting high-value apprenticeships for young people
Lastly, the review seems driven by two clear priorities: delivering its industrial strategy, and opening more apprenticeships to younger people.
Engineering and manufacturing apprenticeships sit at the convergent point of these two priorities. Many align directly with the government’s economic aims, yet are overwhelmingly taken by young people as a first career step.
So whilst we at GTA England are eager to understand the next steps, one huge barrier remains before reform can have real impact in our sector – the £27,000 maximum funding band.
Level 3 engineering apprenticeships such as the engineering maintenance technician have their potential, for the economy and young people alike, restricted by the £27,000 limit when actual delivery costs are considerably higher.
Any business, SME or multinational, scrutinises the decision to take on an apprentice. When training costs up to £10,000 more than they can draw down, it is often a step too far. This is a particular problem for SMEs, and disproportionately hits young engineering and manufacturing apprentices.
Without revisiting the maximum funding band, which hasn’t changed in a decade, the impact of any changes will be undermined.
A great opportunity to refine and improve
Skills England and DWP have a great opportunity to improve apprenticeship funding band allocations. It is the right time to maximise automation and address what the last change did not.
What they can’t do, however, is forget the learning of the past. They must not lose the transparency, focus on costs of delivery and employer input that made the current model better than its predecessor.