Sector Response to the Apprenticeship Levy funding announcements

The long awaited Apprenticeship Levy funding update was released today. Here is the link to the full details on the Apprenticeship funding document. How has the Levy update been received by the sector? 

Association of Employment and Learning Providers (AELP), Chief Executive Mark Dawe was the first to comment on the Levy: 

“Today’s announcement is vital for achieving the government’s 3 million apprenticeship target and we’ve made clear to ministers that training providers can and will deliver the target for them.  Any delay would have made the task very difficult.

“It’s good that we now have new information on the levy for employers.  As the programme’s lead salesforce, our provider members have been playing a huge role in explaining the government’s reforms to employers and businesses say they really need the details that have been issued today.  Working in partnership with employers, we can now get on with the job of ensuring that the levy starts off well.”

Concerns remain on SME engagement in apprenticeships

However AELP has concerns about how the reforms will impact on non-levy paying employers despite the announcement that small businesses will continue to have their apprenticeships for 16 to 18 year olds funded by government.

The proposed subsidy rate of 90% for larger SMEs means that mass disengagement on their part may now be avoided but the insistence of a cash contribution from these employers could in our view still have a very negative impact.  Therefore AELP has asked ministers to keep the matter under review.  The requirement should be quickly phased out if our fears about the impact are realised.

Since the publication of the Richard review proposals for apprenticeship reforms in 2012, AELP has led a relentless campaign to retain incentives which will keep SMEs on board the programme.  These businesses account for more than half of the available apprenticeship opportunities and help make them inclusive for young people across both urban and rural areas.  Withdrawal of these employers will damage the new government’s social mobility agenda and its ambitions for improved productivity.

Mark Dawe said:

“Apprenticeships must be at the heart of the Prime Minister’s social mobility agenda and this is why it’s vital that incentives are maintained for smaller businesses to offer young people a high quality start to their careers.

‘We’ve also said to the government that it must maintain a guaranteed level of funding for the apprenticeships offered by non-levy payers, i.e. it shouldn’t just hope that the levy proceeds are adequate to cover the funding of apprenticeships in all businesses.”

Stephen Evans, deputy chief executive at Learning and Work Institute, said:

“I am pleased that the Department have published this funding information. This should provide employers and providers with some clarity to allow them to plan for the introduction of the new apprenticeship funding system in April. 

“Learning and Work Institute is currently working to make apprenticeships more accessible to those who are currently under-represented, including those from BAME backgrounds and with disabilities, I welcome today’s announcement that government will fully meet the apprenticeship training costs for young care leavers and young people with EHC Plans, alongside a further commitment to support additional costs. I would encourage the Department to use this policy to drive a new Access agenda – much like what we have seen in higher education – to include other under-represented groups such as young adult carers.

 “The clear emphasis on quality in today’s announcements is welcome. Learning and Work shares the views of many employers who believe apprenticeship quality is just as, if not more, important than quantity. However, I challenge the view that an Ofsted grade alone is the most effective measure to use for the purposes of the new Register of Apprenticeship Training Providers – measures of quality must be timely and rounded which is why we’ve called for an Apprentice Charter, designed by employers and Apprentices.”

Commenting on the publication of information from the Department for Education about the revised apprenticeship system including guidance on the apprenticeship levy, Martin Doel, Chief Executive of the Association of Colleges (AoC), said:

“The apprenticeship levy funding system does not appear to be any simpler than before, but we understand that a balance must be struck between simplicity and leaving the system open to exploitation.‎ However the system is managed, the high quality of apprenticeships must be maintained to meet the needs of business and to ensure people are fully trained for their chosen career.

“It is a positive step that small employers will be protected from making payments when they take on an employee who is 16 to 18-years-old, has left care or has an Education, Health and Care Plan (EHC). This will create more opportunities for people in these ‘vulnerable’ groups. However, we need to study the details and consult with our member colleges to understand fully the possible consequences of the rules around the apprenticeship levy.”

Matt Garvey, Managing Director of West Berkshire Training Consortium comments on the Levy: 

“While the new guidance on funding from 2017 confirms many of the rumours the devil is in the detail. The document for providers to focus on is the Apprentice Funding Bands Tool.

“The guidance suggests that upper bands will be capped at the current 19+ funding rate. However, at the same time the guidance suggests that many providers subsidise this rate either from employer charges or from enhanced funding at 16-18. These new bands which cap future rates will come as a shock to many providers who do not offer STEM apprenticeships. Furthermore, with no enhanced funding at 16-18 the question remains how will providers and colleges manage to deliver these grossly undervalued apprenticeship frameworks. Warehousing has a cap of £1500. I can say for certain that we will not deliver an apprenticeship for £1500 and anyone who does so will be sacrificing quality and service to do so.

“More alarmingly is the bias towards Standards. These are generally capped at a much higher rate than their equivalent framework. Given that the former often have no formal qualifications I am at a loss to the logic of this. It must be to drive providers to make the switch much faster. However, how do we react IF THE STANDARD IS NOT AVAILABLE FOR DELIVERY!

“Here are some examples:

Management L5 Framework capped at £2,500.

Management L5 Standard capped at £9,000

“This is unreasonable, unfair and illogical. I encourage AELP and AoC to push hard on this ASAP. Other than the End point assessment in standards, there is no reason for such a huge discrepancy. The derisory caps for many non-STEM frameworks will undermine the delivery of the most popular service sector apprenticeships”. 

Sharon Walpole, CEO of www.notgoingtouni.co.uk comments:

“Whilst the new levy does have its downsides, it’s great to see that businesses with annual wage bills below £3m will have 90% of their apprenticeship fees covered by the Government, meaning they only have to find 10% from the business. Take into consideration that those aged 16-18 years old would also provide a £2,000 incentive, split between the business and the individual, and there are some real incentives here for businesses to look at beginning apprenticeship programmes, or extending the programmes that they already have in place. Apprenticeships give many a chance at a good career and to make something of themselves, particularly those from disadvantaged backgrounds, ensuring that everyone has the access to a good education and a good job.”

Lindsay McCurdy, Apprenticeships 4 England comments on the Apprenticeship Levy news:

“Areas which still need to be addressed are the concerns raised by businesses: https://www.linkedin.com/pulse/membership-professional-bodies-call-delay-levy-lindsay-mccurdy?trk=mp-reader-card who over the past few weeks have asked for a delay, another areas with a question mark over them is that  apprenticeship frameworks and standards starts from April 2017 will be funded from one of 15 bands, each with an upper limit ranging from £1,500 to £27,000. Employers will then negotiate prices with providers. This could lead to a price war which could lead to an impact on quality delivered, which should be avoided at all costs.

“The time frames for the start of the apprenticeship levy are very tight, as we have another consultation which starts today,ends September 5th with the findings published in October, when further funding announcements will be made?

“Apprenticeships are employer lead it so is important that employer concerns are addressed”.

Kirstie Donnelly MBE – Managing Director of City & Guilds said; “We are pleased that the Government has offered further clarity about how the apprenticeship levy is likely to work in practice, in proposals launched earlier today. It’s vital that everyone involved has time to understand how the system will operate so that implementation occurs smoothly and benefits businesses and potential apprentices alike. Now is crunch-time for apprenticeships, and employers must be on board with the new system.

”It is particularly positive to see the Government take steps to encourage SMEs to hire apprentices, by removing their contribution, so they are able to employ 16 – 18 year old apprentices for free. We were also pleased to note that levy paying companies will be allowed to share up to 10% of their payment with other companies on the digital apprenticeship system from 2018. As we set out in our ‘Making Apprenticeships Work’ research last year, ensuring small businesses are well placed to support apprenticeships is fundamental if we are to transform the prospects of the next generation.

”It is also welcome to see the planned additional payment for employers that hire 16-18 year old apprentices or those who might need more support, such as care leavers and those with a Local Authority Education, Health and Care plan up until the age of 24. Apprenticeships must be open to all members of society to help more people make that important first step into the world of work. 

”More generally, it is good to see the proposal to pay all existing frameworks as well as standards within the new set of funding bands. Having single funding bands, regardless of the age or where a learner lives, will dramatically simplify the experience of employers, to the benefit of all involved.

”We also welcome the proposals that an individual can be funded to undertake an apprenticeship at the same or lower level than a qualification they already hold, this removes the barrier graduates currently face in accessing apprenticeships.

”There are still a number of questions to be answered, including around funding for Independent End Assessment, but today is a step in the right direction. It is good to see the new Government maintain the commitment to the apprenticeship levy, and hope this will pave the way for high quality apprenticeships that meet UK industry’s future skills needs.”

Nansi Ellis, assistant general secretary for policy at the Association of Teachers and Lecturers (ATL), said:

“We are pleased the Government is providing financial support for employers who take on 16- to 18-year-old apprentices, those leaving care and young people with education, health and care plans.

“However, we are concerned that many employers will be put off taking on apprentices because they will be required to make a cash contribution of 10% of the cost of training. This could cause problems for colleges, who have been told to seek apprenticeship funding to secure their future finances – particularly now they face the threat of insolvency. Because the Government did not do any scenario planning about how employers would react to the levy it is impossible to know whether it will encourage them to take on apprentices.

“We also need more reassurance that apprenticeships funded by the levy will be good quality.”