Funding reform for Apprenticeships should consider impact on Apprentices

19 August 2013

NIACE believes that the government consultation on a reformed funding system for Apprenticeships in England should consider the needs of the variety of employers across the country and the impact the new system will have on Apprentices.

The government has proposed new options for the delivery of Apprenticeships.

  • Model 1: Direct Payment Model – businesses register Apprentices and claim government funding through a new online system. Government support is then paid directly into their bank account.
  • Model 2: PAYE Payment Model – Businesses register Apprentices through a new online system and then recover the government subsidy through their PAYE return.
  • Model 3: Provider Payment Model – Registered training providers will make claims for government funding, once they have received the employer’s financial contribution.

NIACE has applied its five principles for apprenticeships to the government’s funding reform proposals.

1. An Apprenticeship is an education: NIACE notes that the consultation proposes new freedoms for employers to negotiate the price of Apprenticeship training. Its concern would be that this approach does not impact negatively on the potential of Apprentices’ experience over time.

2. Apprenticeships are for adults too: It is good to note that the consultation recognises that funding reform applies to Apprenticeships at all ages. This approach is critical given the ageing of the UK workforce and the extension of working life.

3. Fair access to Apprenticeships benefits all: NIACE welcomes the consultation’s recommendation to make additional Apprenticeship payments where needed. These payments need to be used to enhance access for Apprentices with additional learning and support needs and to incentivise smaller businesses to offer Apprenticeships, where appropriate.

4. Apprentices deserve the best: The proposed system of Apprenticeship registration that will be core to the new models needs to be simple and ‘employer friendly’. NIACE is concerned that the retrospective payment from the government to employers for Apprenticeships may disincentivise their participation leading to a reduction in the offer to Apprentices.

5. Listening works: Ahead of submitting its final responseNIACE wants to discuss this consultation in more detail with other organisations who are submitting a response.

Ian Bond, Apprenticeship lead at NIACE, said:

“All three of the funding models proposed by the government have advantages and disadvantages. NIACE fully supports reform of Apprenticeship funding to encourage more employer ownership of Apprenticeships. These proposed models, however, may not work for all Apprentices and the vast range of workplaces across the country. NIACE, in its final response to the consultation, will explore in detail the impact of each of the proposed models, taking into account the perspective of the Apprentice in the workplace and how these reforms will encourage reluctant employers to see the benefits for them of the Apprenticeship model.”