Number 10 reveals apprenticeship funding reform ahead of Budget

The two-year apprenticeship funding reform saga in which employers were expected to be handed government money to pay for training today came to an end — with cash continuing to pass directly from the Skills Funding Agency (SFA) to providers.

Number 10 Downing Street, ahead of tomorrow’s Budget, announced that a “digital apprenticeship voucher” would be introduced for employers to give providers who then claim SFA funding.

A spokesperson said the system would give employers “purchasing power,” but actual government cash to pay for training will go straight to providers — just like the current system — and not into employers’ hands first.

It remained unclear how the new system might incorporate current pilots, including employer incentive payments and mandatory cash contributions, although the Department for Business, Innovation and Skills was expected to reveal more details soon.

A Number 10 spokesperson said: “We are putting employers in control of the funding for apprenticeships by introducing a new digital apprenticeship voucher.

“Apprenticeship vouchers will further simplify things for employers and give them the purchasing power over the government contribution to apprenticeship funding.

“The employer would register their details on a system being developed by the SFA, including their type of business, the details of the apprentice and the apprenticeship standard being signed up to.

“The discounted rate, which could be up to 100 per cent for 16 to 18-year-olds and at which employers can purchase training, would be calculated and the employer would be able to pass on the voucher code to the provider that is delivering the training for their apprentice. The provider would then reclaim the value of the voucher from the SFA.”

It comes just a week after Jennifer Coupland, deputy director of the joint Department for Education and Department for Business, Innovation and Skills apprenticeships Unit, told delegates at the inaugural FE Week apprenticeship conference that “employer-routed funding” remained central to the reform plans despite a number of concerns emerging during two consultations.

“To (mis)use a quote from Mark Twain, rumours of the death of employer-routed funding have been greatly exaggerated,” she said.

“The government remains committed to it and sees it as a core part of the reform system and design to support growth and improvement in apprenticeships.”

However, the reform that has emerged bears little resemblance to the proposals of former BBC Dragons’ Den investor Doug Richard, whose report in late 2012 triggered the reform agenda.

His idea for boosting the attractiveness of apprenticeships to employers was to offer them tax incentives through National Insurance or a tax credit system.

He wanted employers, funded via either system, to pay providers directly for delivering their apprenticeships, adding their own funding to that of the government.

But a 2013 consultation uncovered wide-spread opposition to employer-routed funding.

And a three-month technical consultation, which ran from March 6 last year and attracted 1,459 responses, put forward a credit account reform option in addition to a PAYE model — but both were rejected in January as Skills Minister Nick Boles said more design work on the system was needed.

Martin Doel, Association of Colleges chief executive, told FE Week: “It has been a long term intention of government to put the purchasing power for apprenticeships directly in the hands of employers. It remains to be seen if this voucher scheme does make the system simpler for employers as intended, or whether it actually introduces further bureaucratic complexity to apprenticeship funding.”

The new system was also given a cautious welcome by CBI director-general John Cridland, who said:  “Employers must be in the driving seat when it comes to apprenticeship funding, so we welcome the announcement of the voucher system but await further details.”

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  1. Still more red tape for employers and providers! We struggle getting ERN numbers never mind waitinv for this. It will hold up the whole process which in the end will have a negative effect on the learners.

  2. Mark a Frost

    Apprenticeship reform = Apprenticeships more attractive to employers, less Bureaucracy.

    Latest ‘thinking’ (I suggest) = Another expensive adninistartive system,complexity and Bureaucracy assured = Apprenticeships less attractive to employers (in particular SME’s)

    I would really like to believe that this would not be the case, however 2 years on …………..

  3. Will this lead to providers having to enter the code in to the Individualised Learner Record information on the already bureaucratic system, I guess so, but perhaps a small price to pay

  4. So the Employer will purchase a voucher – and pay their contribution before training commences – and providers get the funding direct from SFA. Government directly collects the employer contribution and passes on to provider along with its own contribution? It may not please Employers, but it removes a headache of collecting Employer contributions it seems …. or have I misunderstood?