Business leaders welcome changes that also include more money for 16 to 18-year-old apprentices, and more time to spend funds – but some reservations persist
The government has backtracked on cuts to apprenticeship funding, following warnings over the impact the measures would have on young adults in deprived areas.
Plans initially released in August would have cut the Skills Funding Agency’s apprenticeship budget for 16 to 18-year-olds by 30 per cent but, following protests from businesses and a campaign led by Labour MP David Lammy, the government has committed to double its spending on apprentices.
The government said a fund of more than £60m would be invested in supporting apprentices from the poorest areas in the UK. These revisions to the apprenticeship levy, which will come into effect in April 2017, will provide greater support for younger apprentices and those with disadvantaged backgrounds, by providing financial support to businesses that take on apprentices with education and healthcare plans, or those who had a background in care.
In a move to encourage more organisations to take on younger apprentices, funding for businesses that train apprentices aged between 16 and 18 has been increased by 20 per cent.
Robert Halfon, the apprenticeships and skills minister, said:
“Since announcing the proposals for apprenticeship funding, we have listened hard to all the feedback we have received to ensure people can gain the skills they need now and for the future.
“In order to help providers adapt to the new system, we are introducing an additional cash payment equal to 20 per cent of the funding band limit when they train a 16 to 18-year-old on apprenticeship frameworks.”
The revised plans also grant greater flexibility to employers, giving organisations 24 months to spend funds in their digital accounts – up from the original limit of 18 months. The government has also committed to giving employers the ability to transfer digital funds to other companies in their supply chains.
Industry leaders have welcomed the changes to the levy. TUC secretary Frances O’Grady said the revisions would provide a “welcome boost”’ to apprenticeship funding and employers, but experts suggested there were still issues with the levy that were yet to be addressed.
Elizabeth Crowley, skills adviser at the CIPD, said:
“While we welcome the additional funding for disadvantaged young people and for young people in general, this alone will not address the broader concerns that the CIPD has both with the apprenticeship system in general, and the crude mechanism of a levy arrangement that only focuses on apprenticeships to boost workplace productivity and skills.
“There are real concerns that the apprenticeship levy in its current form will divert funding away from other higher-level schemes and workplace training, as well as the risk that pushing for this volume of three million [apprentices by 2020] risks employers gaming the system, rebadging existing training into apprenticeships and further devaluing the apprentice brand.
“For many people, the apprentice brand does not have parity when compared with the higher education route, so, instead of going for this volume approach, we really want to see the government work with employers and employer bodies to develop a coordinated approach to developing the standards and qualities of a vocational pathway.”