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No consensus on apprenticeship funding reform after government consultation

The government has concluded that “further detailed design work is needed” on apprenticeship funding reforms, following its consultation in March 2014.

The funding reform technical consultation sought feedback on giving employers direct control of apprenticeship funding through two government contribution models, a PAYE deduction model, and an apprenticeship credit model.

It received 1,459 responses, however, Mr Boles said “there was no clear preference for either of the proposed payment mechanisms and a number of specific concerns were raised with features of them both”.

Concerns have been raised by construction SMEs that the additional administrative burden and cost of associated with controlling the funding and training of apprentices themselves would make it more difficult to take on apprentices.

In April 2014, a survey by the Electrical Contractors’ Association found that 94 per cent of its members feared their company would take on fewer or no apprentices if the government’s reforms proposed reforms were implemented.

Mr Boles added: “I understand the apprehension from many employers, especially small businesses, about any potential administrative burdens or negative impact on cash flow… I will not introduce bureaucracy that will make it more difficult for employers to offer apprenticeships.”

The government’s response reiterated that giving employers direct control of apprenticeship funding remained a “core and non-negotiable part of our reforms”.

Federation of Master Builders chief executive Brian Berry said the response gave “no clarity or reassurance regarding the future of apprenticeship funding”.

He said: “We have waited eight months for the government response to their spring 2014 consultation and have today been presented with two sides of A4 which only serve to fuel our fears about the ability of SME construction firms to train apprentices.

“If SME firms – particularly micro-firms – are asked to pay for apprenticeship training up front it will have a negative impact on cash flow and increase levels of bureaucracy no matter how simple the system is.”

ECA director of employment and skills Alex Meikle said he was pleased the government had listened to its concerns about the funding systems proposals.

“We will continue to work with government to make them aware of the impact that changing the apprentice funding system will have on small businesses and strive to ensure any changes do not harm small businesses, apprentice numbers or the gold standard apprenticeship offered by the electrotechnical industry,” he said.

CITB director of policy and strategy Steve Radley also welcomed the announcement that further work would be done to ensure funding reforms work effectively for employers.

He said CITB’s research with employers “showed that the government’s initial proposal was perceived as unattractive and difficult to work with for much of the industry”.

“We welcome the government’s positive response to feedback and look forward to working with it to develop a system that achieves the ambition and minimises: disruption to the training environment and; the administrative burden. 

“The best way ahead is to give employers the option to self-manage or opt for a managed service facilitated by a third party. This would provide true employer choice and empowerment and put them in control.”

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