Ideal Queen's Speech: Reform the funding of apprenticeships and make HMRC responsible

"My Government will introduce a Bill to pass the responsibility for funding apprenticeships to employers, making HMRC responsible for delivering the funding of these payments through the introduction of a direct credit model."

The Government has stated that it wants the standards of all apprenticeships to be raised to the level of the best, by making them more rigorous and more responsive to the needs of employers so they can grow and compete. This can only be a good thing.

One way the Government hopes to bring this about is by changing the way that the training of apprentices is funded. It says it will do this is by giving employers direct control over the funding of the external training and assessment of their apprentices. This will give employers more influence to improve its quality and relevance. Again, this can only be a good thing.

However, how this funding is to be administered is crucial to the successful implementation of these aims.

The government has considered two options; either funding through the PAYE system or through the creation of an Apprenticeship Credit. The CIPPand its members firmly believe that the government should discount the option of using the PAYE model and instead design a direct credit model.

Using the PAYE model would require two different operating systems depending on the PAYE liabilities of each company and would impose a massive administrative burden on the small employer in particular, not only by having to keep manual records of funding permitted, comparing this against the payments due to HMRC, but there is also the risk of unintentional non-compliance and resulting penalties.

The CIPPcan see how using the PAYE model would seem, on the face of it, to be attractive to Government, however the operating system used to transmit returns and payment information to HMRC, commonly known as RTI, has its own challenges when reconciling payment information with the tax and NIC figures it believes is due. Introducing another element affecting the reconciliation of amounts can only lead to an increased number of disputes and an even greater administrative burden on all employers.

For this reason we believe that the Government must implement these reforms through the introduction of a direct apprenticeship credit model; a stand-alone online account that employers and government can contribute to.