An alternative way forward for Apprenticeships

In 2013 the Government consulted on three different options for funding Apprenticeships. None of these options received the full support of employers or the support of any other of the stakeholders in the sector.

As a result, ministers have included in their most recent consultation another option for routing funding directly to employers. It utilises online bank accounts for employers to manage what they call an Apprenticeship Credit. This moves away from a system that links into the PAYE system and becomes a stand-alone system for managing direct payments to some 200,000 employers.

We have argued from the start of this review that employers, especially smaller employers or those with very few apprentices, will not want to manage these funds directly. They are currently very satisfied with the fact they make the key decisions whist working with a training provider of their choice. Quoting from the government’s own research, employers are ‘satisfied with the amount of influence they have’ and ‘other employers were resistant to the idea of funding being routed through them’.

AELP’s position has always been that employers should have a choice as to whether they route the funding through their own contract if they can meet the assurance and quality requirements or work with a training provider who provides them with that service. The driver for AELP is employer choice.

In its new Technical Consultation, the government sets out the proposals for an Apprenticeship Credit run through bank accounts which, in AELP’s view, would not fare any better when it comes to engaging more businesses in the programme. The idea looks as complex as the previous PAYE model. This is compounded by the confirmation that the government wants to press on with compulsory employer cash contributions for the cost of the training which will be a further barrier to entry for employers and will affect the recruitment of younger apprentices who are clearly a group that require even more support..

We are left in a position where we are lobbying against the latest proposals even though AELP shares the government’s original objectives for building on the success of the programme which now has over 850,000 apprentices in training. The principal objectives of the changes were to increase the number of employers offering Apprenticeships, giving employers more ‘ownership’ over the programme and making the system simpler for employers to navigate. As important is the objective that the changes must benefit the apprentices themselves, many of whom are young people starting their first career role.

Everyone agrees that many more employers could gain benefit from Apprenticeships. As previous BIS research has shown, it is also clear that most employers get involved in the programme through a discussion with an approved training provider so the focus for change should be on engaging employers, not on the funding of the system. We believe that a number of actions would improve the perception and understanding of the Apprenticeship programme and provide a better flow of applicants through the system, such as:

• improving careers advice and guidance for all

• a programme to support young people that fail in their Apprenticeship applications process

• making Traineeships the overarching programme for entry to work and make the programme more flexible for providers and learners including the removal of restrictions on benefit rules

• simplifying the funding rules and making them transparent for employers

• giving employers the choice of a direct contract or to work with a provider

• ensuring employers sign off the progress of learners and their programme completion and

• ensuring the employers understand they can choose the provider of their choice at any stage of the programme.

These changes would drive employer choice and commitment and would encourage more employers to get involved with Apprenticeships. The evidence set out in the most recent consultation is that most employers (especially smaller employers) ‘prefer the provider payment model as it would generate the smallest administrative burden’.

This is why AELP is urging providers to encourage their local employers to respond to the new consultation over the next eight weeks with them making the point that a choice over how the employer wishes to be funded must be kept open. Without a major rethink, fewer Apprenticeships opportunities will be available to young people who really need them.

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