Following the inconclusive Consultation, government says that further design work needs to be done on the funding mechanism


In The Future of Apprenticeships in England: Funding Reform Technical Consultation (March 2014), the government sought feedback on implementation of the principles underpinning the new funding model for Apprenticeships. It also consulted on two mechanisms for directing payments to employers: the PAYE system, which would deduct the Government contribution from an employer’s PAYE payment; and an Apprenticeship Credit model, which would automatically top up an employer’s payment with the Government contribution. The analysis of results to this consultation   shows there was no clear preference for either of the proposed options presented in the consultation for directing payments to employers.

The government says that ‘Giving employers direct control of apprenticeship funding remains a central and fixed part of  its funding reforms. And it will   ‘continue to work closely with employers and other major stakeholders to achieve the most effective way of doing this.’

The government added that giving employers direct control of apprenticeship   ‘is central to driving the right behaviour in the system’ and that ‘ based on the feedback to the consultation, we have concluded that further detailed design work is needed before we can reach a final decision on which funding mechanism will be taken forward to meet our shared aim of more high quality apprenticeships, where employers hold the purchasing power. We will continue to undertake this further work with you, in an open and collaborative way.’

The Skills minister Nick Boles, giving evidence recently to the Education Select Committee on 14 January, said that he has in mind a simple third solution. BIS is working flat-out on its design but the minister could not promise that it would be put forward before the general election.

Boles couldn’t go into details about the solution but he did start talking about employer cash contributions which he still supports in principle. He said that new employers should not have to contribute in the apprentice’s first year but thereafter they might pay a third of the cost. A minute or two before saying this, he talked about ‘ramping up’ contributions over time. But the new funding system may not be fully implemented until 2018-19.He was pressed quite hard by the committee chairman on whether there was a policy tension between demanding cash contributions and growing the number of employers engaged in the programme.  He acknowledged the role of providers in selling apprenticeships to employers, saying that this was no different from many other services or products.

The minister defended Level 2 apprenticeships pointing to the earnings premium that BIS research had found, although he added that ideally we should have more at Level 3. Better destination data after leaving school is a government aim although at the moment this data is too crude and needs to be , in his words, more “granular”. On careers advice, the minister said that schools are mandated enough, although, unlike the Secretary of State, he would like to see schools marked down a grade by Ofsted inspectors if they are not taking their duty to provide good professional careers advice seriously enough.

A video recording of the two-hour evidence session can be watched at:





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