The Institute for Apprenticeships is forecasting a £500 million overspend on the levy budget by July 2019, rising to £1.5 billion for the year ending July 2021.
It is clear that forecasting models for expenditure, before the Levy’s introduction in May 2017, significantly underestimated the reality, in terms of starts on high value apprenticeships with prices set at their cap.
In addition, the monthly funding methodology means payments quickly accumulate for on programme apprentices and new starts.
As a result, in the wacky world of FE funding, we have the majority of employer levy pots currently going unspent at the same time as plausibly the IfA forecasting a huge overspend in the overall budget.
The Department for Education contacted FE Week to say the IfA figures are “out of context”, yet the IfA stands by them (although refuses to share the whole presentation) and the education secretary, Damian Hinds, is not disputing the figures.
Hopefully the IfA and DfE will have an agreed position before the National Audit Office publish the outcome of their second enquiry into the apprenticeship reforms early next year.
Either way, if the IfA figures are even close to reality, reducing funding rates following their review process won’t be enough.
The first priority, as recommended by Ofsted’s chief inspection, Amanda Spielman, should be to focus on using the funding where it is needed most.
So, more funding for training young people entering the job market.
Less funding for training adults already in a job, particularly on management degrees that employers should not be subsidised for.
The skills minister, Anne Milton, understands this. In March, she told the education select committee that “fears of a middle-class grab on apprenticeships are valid”.
In October, she said at a Conservative Party Conference fringe event: “We need to be careful we don’t crowd out levels 2, 3, 4 and 5.”
And when asked this week about the growth of management apprenticeships by David Hughes, the chief executive of the Association of Colleges, she said: “We need to look at do we continue to fund apprenticeships for people who are already in work, people doing second degrees.”
The fact is, levy funded employers are first in the queue to invest in apprenticeship training, but it is public money.
The government must now quickly and decisively step in and prioritise what that training is and who it is for.