The Government has announced that it intends to significantly change the way Apprenticeships are funded. The proposed changes will remove much of the responsibility from the training provider and place this upon employers. The changes are intended to give greater purchasing power and control to the employer but along with that control, greater responsibility and accountability… and work!
The full consultation document is available at: https://www.gov.uk/government/consultations/apprenticeship-funding-reform-in-england-payment-mechanisms-and-funding-principles.
Summary of the proposals and their potential impact
From July 2016 Government funding will be routed direct to you the employer, we do not yet know the impact on funding rates and the maximum Government contribution. You will however have to pay a mandatory financial contribution toward the cost of training.
We are concerned that these actions will affect the ability of employers to recruit and train Apprentices, increase the administrative burden for employers and introduce confusion to the system.
The current system looks like this:
From July 2016 it will look like this:
How is the Government planning to administer these changes?
The Government’s financial contribution will be via PAYE or an Apprenticeship Credit via an online account for the employer - you and the Government will pay in your contributions and from this you can buy training and assessment from approved training providers. A contract between you and the training provider will be required to confirm what is being purchased, timeframes, payments etc.
The online employer account will allow the Government to monitor payments from the employer to the training provider, check financial balances and learner progress. The employer will need to keep the online account up to date. Employers who outsource their payroll function may incur additional cost or extra administration in operating the system.
Recognising that 16 and 17 year olds often require more supervision when new to a role, the employer will receive an additional “one off” payment or credit once the apprentice has settled into their learning in the workplace. This needs to be balanced with the new requirement for employers to pay a mandatory % of the cost of training for 16 and 17 year olds.
What happens with the funding currently?
Currently the funding is paid directly to your approved training provider and in some cases you may also make a contribution towards the cost of training for apprentices aged 19 or over. In most cases this contribution is less than half (and sometimes much less than half) of the full cost. The Government funding pays the training provider to assist you in:
- Recruiting and vetting new apprentices
- Conducting initial assessment and job match suitability
- Registering and certificating your Apprentice
- Delivering the Apprenticeship training
- Delivering or arranging technical theory, Maths and English
- Completing all of the required paperwork
How will the proposed funding reform affect you and your business?
You will have greater control over which training provider you select and also the price that you pay for training.
You will pay a mandatory % of the training costs (all ages). We do not yet know what that % will be (potentially at least 50%). The Government will contribute the rest (up to a maximum).
You will need to pay a mandatory % of the training costs for 16 and 17 year old Apprentices.
You will need to contract with an approved training provider or training providers to deliver the competency and knowledge components of the apprenticeship and the functional skills in maths, English and IT.
You will need to contract separately and pay for the formal end-point assessment of your apprentice.
You become responsible for some of the administration via a new Government website including: assessing eligibility, registering the apprentice and recording their start and assessment outcomes.
You become responsible for making contract payments to the training provider.
You may pay out more than you receive from the Government if the Apprentice does not complete their programme.
Making your views heard
It is our strong belief that the Government needs to hear more views from employers to make an informed decision. Some employers may see the changes as progressive; others may be concerned about the additional level of responsibility placed upon them.
The current Government consultation closes on the 1st May. If you employ apprentices already or are interested in employing apprentices in the future we kindly request your assistance, as an employer of apprentices, in the completion of the response form available for download at https://www.gov.uk/government/consultations/apprenticeship-funding-reform-in-england-payment-mechanisms-and-funding-principles.
As you would expect, Damar has submitted a response in our own right as an employer of apprentices. If you would like to see a copy of our response, please email us at email@example.com.