Government announces new apprenticeship funding model

Employers to be given more power over where money is spent 

Employers will soon be in control of money for apprenticeships, as the government has announced a new digital apprenticeship voucher scheme.

The apprenticeship vouchers are designed to simplify the process for employers and give them power over how to spend the government’s contribution to apprenticeship funding.

Under the scheme, organisations will need to register with the Skills Funding Agency (SFA), which is currently developing a system specifically for this. To register, employers will need to provide details about their business, individual apprentices and the level of apprenticeship they want to run.

A voucher will be generated by the system, which employers can then pass onto training providers of their choice. The provider would then reclaim the value of the voucher from the SFA.

The digital system will also calculate the amount of government funding employers are entitled to, which could be up to 100 per cent of the cost of apprenticeship training for 16 to 18 year olds.

Stewart Segal, chief executive of the Association of Employment and Learning Providers (AELP), welcomed the proposed scheme as his organisation has previously recommended giving employers more purchasing power in this area.

“Employers have always been in the driving seat of apprenticeships. The government’s announcement reflects the views of employers because they can choose the provider to manage the funding support provided by government,” he said.

However, he added: “We have yet to see the details behind the announcement but we would hope that the government is now talking about simpler funding support from government.” This would still need to take into account the various incentives proposed in the previous funding models rather than separate payments for each, he said.

Segal said AELP wanted to work with the government to “avoid some of the barriers” that could deter employers from introducing apprenticeships. For example mandatory cash contributions and employers setting the funding rates.

“We think it’s right that a final decision is not taken about this until further discussions and testing have taken place which might allow for all employers’ contributions to be part of the funding system,” he said.

Also commenting on the extra powers for employers, Tim Thomas, head of employment and skills policy at the manufacturers’ organisation EEF, said: “Employers have been calling for years for an apprenticeship system that puts them firmly in the driving seat so the proposed new funding model using a digital vouchers  is both very welcome and an important step forward.”

He agreed with Segal that for the process to be effective ministers must avoid adding unnecessary red tape and give employers full control of apprenticeship funding, “which will be key to providing high quality training,” he said.

“Without this, many employers will continue to be frozen out of taking on their first apprentice or deterred from expanding their current apprenticeship schemes.”

Thomas urged the government to “immediately” start working with employers to finalise the design of the funding mechanism to ensure it is “simple, suitable for firms of all sizes and permanent”.

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