At last, an Apprenticeship funding system

So, after a short delay, we have had the publication of the post Levy funding details.

Labelled as ‘Funding changes’ I think the government has been unusually modest, this is actually the first bespoke Apprenticeship funding system since – well since the last time that  Apprenticeship levies were introduced way back when.

[PS wouldn’t it be great to find the Gov. report that accompanied the end of the original Apprenticeship Training Board levies all those years ago and to read why they needed to go..]

When Modern Apprenticeships were introduced 20 years ago, the Government took back under its control, what had been essentially an employer led training and employment system.

The tools that it had at its disposal were those of FE sector. So we got a set of apprenticeship ‘frameworks’ that were constructed from FE qualifications and apprenticeship funding delivered via the FE system.

Thus the current Apprenticeship (and wider FE funding system) is based on supporting traditional academic annual cycles and curriculums.  With contracts set by academic years  and weighted to support ‘colleges’ with the most disadvantaged learners.  

To the credit of the LSC’s funding wizzes, and a very flexible college and provider base, the FE funding system has been amended and stretched to cover the rise in NVQs and then Apprenticeships.  With regular tweaks such as varying funding by age bands or adding incentives to try and steer the ship.

There have been some notable blips along the way which have exposed the seams but generally things have been made to function.

However the increased political focus on Apprenticeships has exposed the main issues with funding Apprenticeships as if they were college courses, and so Apprenticeships now have earned their very own funding system. A system which seeks to solve these problems:

Tacking complexity

Funding based on annual grants and learner characteristics may have made sense for colleges but it never did to employers.  It was a system that was never meant to be exposed or explained to third parties and so the idea of us ‘hiding the wiring’ was always a futile and frustrating task.

The levy funding system (the non-levy system maybe not) is designed to support an open, all age, all level programme.

It is a rolling, monthly funding system – aligned to employer’s employment patterns via their wage bills – not Academic cycles or SFA budgets. This is a fundamental change.

It does not try and influence who gets an apprenticeship by funding those in different postcodes or ages brackets differently (try explaining  the up to 80% swing in funding possible between 2 colleagues at the same company on the same course).

This means it is inherently much easier to explain and understand.

Defining the employer role in funding

No one ever wanted the state to foot the entire apprenticeship bill but we have struggled to find a flexible yet equitable system for employers to contribute.

Voluntary employer payments didn’t work; despite the sector’s best efforts the theoretical contributions system has only led to cost savings at best and a race to bottom at worst.

Now we know what every employer must pay for each apprentice.

Larger employers are being asked to contribute the lion’s share, which may or may not be fair, but it is at least transparent.

Quality vs quantity

Everyone wants there to be more apprentices and for them to be ‘better’.

But for several years volumes have flat lined at 500,000 starts per year and success rates at 70%.

The ASB / AEB well is dry and 5 years without any inflationary rises has reduced apprenticeship rates by 20% in real terms   (removing most providers’ margins) and so rates cannot realistically be squeezed further.

The Levy will bring in maybe £2bn PA and even if the Government takes say £500m out of its core budget that will still double the total pot from c£1.5bn to c£3bn.

• Does this mean rates per Apprentice will increase?

Yes and no. Rates for advanced or higher STEM based apprenticeships and some 25+ apprentices are significantly higher but many service or office skills based apprenticeships are lower.

And of course removing the hard prior qualifications rules will mean that millions more employees could be apprentices.

• Does this mean apprentices will be better?

I don’t think it is possible to know this yet but the prevailing theory is that greater employer investment and involvement can only be a good thing so we shall see.

It will be several years before the new balance settles, but this is at least the start of an apprenticeship funding system. 

Richard Marsh, Apprenticeships Partnership Director, Kaplan UK