Government plans Apprenticeship funding reform

Employers could be funded directly to buy Apprenticeship training as part of reforms put out to consultation by the government today.

Business Secretary Vince Cable said its proposals would put businesses in the driving seat to acquire the training that is most relevant to their needs.

Three initial proposals have been put forward:

• Direct Payment Model: Businesses register Apprentices and report claims for government funding through a new online system. Government funding is then paid directly into their bank account.

• PAYE Payment Model: Businesses register Apprentices through a new online system. They then recover government funding through their PAYE return.

• Provider Payment Model: Government funding continues to be paid to training providers, but they can only draw it down when they have received the employer’s financial contribution towards training.

Cable said: “Employers are the best people to judge what training is worth investing in. These reforms will mean just that.

“It gives them the power to train their staff to make sure their skills are relevant to the company, while choosing from the wide range of courses available. These measures are all part of the wider reforms the government is making to the Apprenticeship system. By putting quality ahead of quantity and giving the training that companies actually want, we are helping to create jobs and support business.”

The consultation follows recommendations put forward by entrepreneur Doug Richard in November 2012 on how Apprenticeships can meet the needs of the changing economy.

However, a body representing providers that train around 75% of England’s apprentices expressed “considerable doubts” over some of the proposals.

The Association of Employment and Learning Providers (AELP) said using the HMRC’s PAYE system could create a barrier to entry for small employers, threaten quality, and create tensions with the interests of young apprentices.

AELP chief executive Stewart Segal said: “We have considerable doubts over whether the PAYE proposal would actually bring more employers into the apprenticeship programme. In fact, it might put smaller businesses off. The co-funding option might have merit if it properly recognises the contributions which employers make towards an apprentice’s framework achievement.

“AELP will be pressing ahead with its own consultation of employers and research to try and ensure that the way forward is properly evidence-based. If we want to build on the major growth in apprenticeships over the last ten years, then it is vital that we get this reform right.”

Natalie Thornhill

(Pictured: Business Secretary Vince Cable)