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Proposed changes in funding for apprenticeships
Published:  30 April, 2014

Apprenticeship reform will affect the way funding is allocated for apprenticeships, warns the Association of Plumbing & Heating Contractors.

There is currently ongoing debate about the reform with industry-wide concern around the idea that in the future, employers may need to pay money towards apprenticeships as well as having to take on extra responsibilities such as managing accounts, that are also contributed to by government, and also taking on responsibilities of selecting providers.

The Department for Business Innovation and Skills (BIS) has published an implementation plan, which focuses on giving employers more control over the design of apprenticeships and their assessment, in an apprenticeship reform. BIS has just closed a second phase of consultation for which there is a Funding Reform Technical Consultation.

Cost is a major factor. Currently, training providers are paid directly by the government to deliver the apprenticeship. The proposed changes will mean that employers will be part-funded by the government to purchase training and assessment from providers, but employers will also be required to make a cash contribution to those costs.

Employers would potentially need to: select providers to deliver training and assessment as separate aspects of the apprenticeship; to negotiate prices for those providers; to pay providers directly by either paying the full amount to the provider and claiming a set proportion back from the government through HMRC, or paying a contribution into a dedicated account which the government also adds money to; employers will then manage this account and as a manager of public funds, employers will be liable to any audits the government would like to conduct.

On 20 March, BIS and the Department for Education reported that £170 million of additional finance will be made available to fund the Apprenticeship Grant for Employers (AGE) scheme, over two years 2014-16, and also announced a new funding package of £20 million pounds to support degree level and postgraduate apprenticeships, also over two years 2014-16.

“While the extra funding is undoubtedly good news, there is industry wide concern at the apprenticeship reforms. There is concern that the number of apprenticeships may fall. Employers are potentially going to be asked to burden bigger responsibilities, which may include meeting an increasing proportion of costs to fund the apprenticeship,” said APHC chief executive John Thompson.

“We will watch the outcomes closely. One of the key criticisms of the current proposals is that they're too complex and companies will be put off by the bureaucracy involved, with overall numbers of apprentices reducing significantly”.