The BIS department has reportedly received over 200 responses to its consultation on the future funding of apprenticeships and given the scale of change being proposed, this was hardly surprising. There is almost universal agreement over what the government is trying to achieve – it's the best route to the shared objectives that is prompting a lively debate.

The most important goal is to see more companies employing apprentices with a much larger take-up by SMEs. There is also agreement that there should be more employer engagement in programme design and the funding system should also be simpler and more transparent. In the view of the Association of Employment and Learning Providers (AELP), these objectives will not be achieved by going down the route of directly funding employers for their apprentices which two of the consultation options proposed.

Strong degree of employer ownership already

Leaving aside the funding issue for the moment, we should address a common complaint from last year's apprenticeship reviews, namely that employers have very little overall ownership of apprenticeships. This does not stack up when you consider that the employer is responsible for all of the key elements of the programme. Employers have always been involved in the development of the frameworks through the Sector Skills Councils although we know this process can be improved. They make the decisions on the recruitment because all apprentices are employed and they agree the conditions for the apprentice's employment. The employer is also involved in the on-going assessment and job role, as well as measuring the competence and performance of the apprentice. The employer needs to be happy that the apprentice has satisfactorily completed the programme. Of course, all of this is done with the assistance of the training provider and external assessor, but the employer's contribution and ownership should not be underestimated.

This contribution is generally described as 'in-kind' because it is not a cash contribution made to the training provider. But this underestimates the real cost to the employer of the programme which includes wage costs, time off the job, on the job supervision and training, and provision of training facilities. Whichever of the three options in the consultation that the government chooses to follow, it is expected that employers will in future be required to make an upfront cash contribution to meet the programme cost. A recent AELP survey of providers and employers found that many employers, especially SMEs, would be put off the programme if this policy is adopted. The problem is that the requirement would pose potentially major cashflow challenges for many businesses – a fact that the UKCES acknowledged in its response to the consultation. The Commission also reported from its roundtable discussions with employers that the current general level of in-kind contributions had to be properly recognised before ministers reached a decision on the way forward.

There has been no indication from the government so far that apprenticeships for 16 to 19 year olds would be exempt from employer mandatory cash contributions. When apprenticeship numbers for this age group are already falling, this would potentially have a disastrous impact. Furthermore in the context of the introduction of Raising the Participation Age, we would be looking at a major policy inconsistency when other forms of education and training for this age group are fully state funded. AELP believes that we need a sector wide plan to improve the provision of apprenticeship places for these young people and we should avoid any changes to the funding system that creates a risk to that expansion.

Another proposal that has sparked concern is that if the government funding came first to them, employers would get to fix the price of the training delivered by the provider. To some degree, there is already scope for employers and providers to negotiate a fee, particularly when there is a large volume of learners involved. The current proposals for market pressure to drive fees may create a general downward pressure on pricing which would impact on the quality of apprenticeship programme delivery.

Overall AELP believes that employer direct funding would not help to achieve the agreed objectives behind the reform. In addition to the concerns already mentioned, we would be asking businesses to manage multiple contracts and the additional bureaucracy would deter many employers. The auditing of the public investment would be difficult and controlling the level of investment would be challenging.

AELP's proposals for reform

The current apprenticeship programme has been a success but we know that we need to continue to reform the programme to increase its impact. We can bring more employers on board by building on the current system. We can:

  • simplify the funding rates and standardise the qualifications

  • make the rates more transparent to employers

  • improve employer choice over which apprenticeship frameworks and providers to use

  • encourage flexible and innovative delivery

  • introduce a variation of the SFA's Innovation Code for apprenticeships to respond to employer choice

  • develop the traineeship programme as one of the entry points to apprenticeship and

  • a greater focus on 16 to 19 year olds through better careers guidance, support for making applications for an apprenticeship and the funding and delivery of English and maths.

Finally we need to hold any proposed funding reforms until a review of the framework reforms has been completed. The funding options should then be reviewed in the light of any framework reforms that are implemented over the next couple of years. These changes should be subject to a full impact assessment with careful piloting in a sensible timeframe.
Ministers have acknowledged that we are dealing with a success story here, not something that has gone wrong. Therefore in order to build on the credibility that apprenticeships have acquired over the last ten years, we want to proceed with confidence that these reforms will lead to greater employer engagement and higher quality delivery for the benefit of employers and apprentices.

Stewart Segal is chief executive of the Association of Employment and Learning Providers


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