3 million Apprenticeships target under threat after massive government funding cuts

Apprenticeship training providers have reacted with unprecedented dismay to government cuts to the funding that helps support smaller businesses offering apprenticeships.

Areas of the country face becoming close to ‘apprenticeship deserts’ for young people over the next 7 months where there are few or no large levy paying employers to make up the shortfall. Current apprentices could also be cut adrift from their programmes as a consequence, seriously undermining the government’s social mobility agenda.

Without any prior warning, funding allocations to training providers have been reduced by up to 89% by the Education and Skills Funding Agency (ESFA) for non-levy apprenticeships with many good quality apprenticeship providers, including much needed specialist ones, now fearing that they will go out of business.

The Association of Employment and Learning Providers believes this is madness when the government has been steadfast in its commitment to see 3 million apprenticeships created between 2015 and 2020. Achieving the target is dependent on having a strong base of providers around the country offering apprenticeships across almost the whole range of industrial and service sectors. AELP is now asking if the 3 million starts target will be dropped from the Conservatives’ new election manifesto.

The shock allocations have come after complaints forced the government to reopen its new register of apprenticeship training providers to new applicants at short notice and ministers placed a pause on a hugely oversubscribed procurement of non-levy apprenticeship provision.

Providers had been hoping that the pause on the £440m tender would mean that providers could maintain much of their current provision for employers and offer new starts to apprentices. Instead after the new interim allocations, most are forecasting a massive drop in the number of apprentices they can start on new programmes. This will have significant implications for the 3 million target.

The worst impact of the latest allocations will be on training providers who rely on subcontracted business from the so-called main providers. Many main providers are reporting that their new allocations are now so small that they themselves cannot afford to pass on any business to subcontractors, ending long-standing and trustworthy relationships and possibly sending the subcontractors into the arms of the receivers.

Current apprentices being trained by subcontractors could then be left in the lurch and AELP has protested to the ESFA about this in the strongest possible terms.

Training leaders want the funding agency to be completely transparent about how it arrived at the latest allocations and to revisit them as quickly as possible.

AELP CEO Mark Dawe said:

‘AELP wants the levy to be kept. Furthermore we believe that 4 million quality apprenticeship starts could be achieved in the next Parliament if approached in the right way. But the government’s reforms for the apprenticeship programme risk turning into a horror show unless ministers and officials get a proper grip on the process.

‘Officials must be much more willing to share in private their thinking and methodologies with the principal stakeholders so that we can point out possible mistakes before they are made. We recognise that the election purdah places a real challenge in sorting matters out but the ESFA needs to go back to the drawing board immediately on the non-levy allocations in order to avert the type of catastrophe that will really damage the image of apprenticeships in the eyes of employers, parents and young people.’

AELP has iterated in its own election manifesto for skills and employment that guaranteed funding of at least £1bn a year is required for non-levy paying SMEs for their apprenticeship needs. It has also written to the Education Secretary Justine Greening about the non-levy allocations and a copy of the AELP letter is available here.

In October 2016, the government and the Education and Skills Funding Agency launched a £440m procurement exercise for providers to bid for apprenticeship funding allocations to support the training of apprentices employed by non-levy paying SMEs. The plan was for successful bidders to use their allocations to start new apprentices training in SMEs from 1 May 2017 alongside apprentices being employed by the large levy paying employers. 

Following issues and complaints surrounding the new Register of Apprenticeship Training Providers which is the official list of providers that are permitted to participate in the government’s funded programme, a ‘pause’ was placed by the ESFA on the procurement this month (April 2017). In an attempt to ensure that new starts could still happen from the beginning of next month, the ESFA has just issued providers non-levy funding allocations to cover the months May 2017 to end-December 2017. It is the small size of most of these that has caused the huge concern among providers.