Clarity sought on apprenticeship funding reform after Government response

FMB says construction industry could be badly hit by plans to make employer's responsible for training funds

NECC policy and research manager, Mark Stephenson
NECC policy and research manager, Mark Stephenson

Trade bodies are urgently seeking clarity on the future of apprenticeship funding after the publication of the Government’s response to a consultation on the matter.

Currently, funds for training are channelled through providers, but last year the Government sought the views of businesses on a proposed new model, whereby employers would control them directly.

After receiving feedback from nearly 1,500 respondents, Minster for Skills and Equalities, Nick Boles, has now said the change remains a “core and non-negotiable” part of planned reforms.

However, further work was needed before a final decision could be reached on which funding mechanism was most appropriate – a deduction from the Government’s contribution from an employer’s PAYE payment or a so-called Apprenticeship Credit model, which would automatically top up an employer’s payment with the Government contribution.

No clear preference emerged from consultation.

NECC policy and research manager Mark Stephenson said: “When NECC responded to this consultation we argued that businesses will welcome a bigger say over how training funds are spent, but that some smaller companies in particular might struggle taking full control over apprenticeship funding.

“It appears that ministers have listened, which is encouraging, but we still lack clarity over what happens next which is far from ideal.

“The Government needs to clarify how apprenticeship funding will work herein, with a focus on keeping the system simple and ensuring businesses provide an appropriate amount of steer.

“It is equally important that this is resolved quickly to ensure that no businesses are put off from investing in apprenticeships by the prolonged uncertainty.”

The Federation of Masters Builders, the UK’s largest trade association in the building industry, went further, suggesting the entire future of the sector hangs in the balance.

Chief executive Brian Berry said: “Today’s announcement by the Skills Minister offers no clarity or reassurance regarding the future of apprenticeship funding.

“Despite the business community – across many sectors – repeatedly warning Government of the potential impact of their proposed reforms on the desire and ability of SMEs to train apprentices, we have been told that giving employers direct control of apprenticeship funding remains a non-negotiable part of the reforms.

“We have waited eight months for the Government response to their Spring 2014 consultation and have been presented with two sides of A4 which only serve to fuel our fears about the ability of SME construction firms to train apprentices.

“If SME firms – particularly micro-firms – are asked to pay for apprenticeship training upfront, it will have a negative impact on cash flow and increase levels of bureaucracy no matter how simple the system is.”

In the Government response, Mr Boles said he understood the apprehension of employers about potential administrative burdens or impact on cashflow and promised not to introduce bureaucracy that would make it more difficult for employers to offer apprenticeships.

While some respondents raised concerns about the inclusion of compulsory cash co-investment from businesses, however, he added that the principle remained a significant part of the reforms.

The Government, he said, would continue to consult with businesses in an “open and collaborative way”.

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