Consultation on Apprenticeship Funding

30 April 2014

The radical change in apprenticeship funding: BWF responds to government proposals

The government has set out plans for a radical change in funding for apprenticeships in England. The system will move funding away from going directly to training providers or colleges, direct to employers. In the case of the CITB, who for the purposes of funding, are considered the training provider, the change would mean a redirection of funding away from them, to employers. Although, this would not affect the separate levy grant system.

The BWF has recently submitted its views on behalf of its membership on how government should move forward. A summary is below, or you can download the BWF's detailed Apprenticeship Funding Consultation response.

Overview

Government prefer a PAYE system of reimbursement for apprenticeship funding which will have the following affect:

•    Employers would have to register each new apprentice via a portal on the gov.uk website
•    Employers will have to negotiate directly with a training provider the cost and exact content of the training (within the constraints of the Apprenticeship Standard)
•    Employers would have to pay the training costs (depending on what’s agreed, either in full up front or in instalments) and then make deduction from their PAYE payments for the government’s share of the cost of the payments. Government funding would not be received ahead of payment for training.

The government has also made it clear that it intends to co-fund apprenticeships, effectively bringing to an end fully-funded training provision, with employers expected to increase their contribution.

The BWF believes that this will have a detrimental effect on Micro and SME businesses taking on apprentices. We believe:

•    It will create significant cash flow problems for our members, who have not previously had to pay for apprenticeship costs in advance. It will significantly discourage industry investment in apprenticeships, further exacerbating the skills gap the woodworking industry faces
•    It will increase the administrative burden on companies both in terms of registering to draw down the funding; making changes, extra processes and potential costs into their payroll systems; and negotiating terms and prices with training providers
•    It will force already under-funded Further Education Colleges to change their business model – most likely to offering academic rather than vocational courses – where they can be sure of their income. The impact of this will be a desecration of the UK’s woodworking departments in colleges and other training providers, further restricting supply of specialist training that the industry has access to

The consultation still sought views on two other funding models: a direct funding model straight into employers’ bank accounts or an apprenticeship credit model.

The former will effectively make the employer subject to the same quality assurance requirements of training providers, including Ofsted inspection and Skills Funding Agency (the government’s funding body) audit; an even more burdensome administrative process for small employers.
The latter basically creates a ‘joint bank account’ with the government, which both employer and government pay into, and then funds (credits) are paid out to the appointed training provider.

Our response and recommendations

The BWF has responded to the consultation making the following points:

•    Due to the significant administrative and financial burden to employers, training providers should continue to draw down funding directly from government
•    The CITB, as an employer-led organisation, should have the ability to draw down government funding by whatever mechanism is pushed forward, so they can manage the administrative process and relieve pressure on employer cash flows. Employers, therefore, would not have to change their current processes, or only minimally.
•    If the government insists on implementing one of the three direct employer support mechanisms, we would support the Apprenticeship Credit model, as it is the least burdensome on employers
•    We believe that full support should be given to Micro and SME employers training costs for all ages to encourage apprenticeships. Benefits to the economy far outweigh the cost to the Treasurey
•    In a system where employers are forced to pay upfront for training, government needs to provide additional support for small employers to help them deal with the initial costs of taking on an apprentice
•    The suggestion that Sector Skills Councils or Trade Associations could provide some of the administrative support to help relieve the burden on employers is welcomed and encouraged, but would need financial support from government directly, not to empose another cost for employers
•    Government needs to provide clear and simple support from employers to make the processes for claiming funding a simple as possible.

Download the BWF's full apprentice funding response

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