The Department for Business, Innovation and Skills launched a consultation today on how apprenticeships should be funded.
It proposes using HMRC’s PAYE system to fund employers’ apprenticeship programmes.
The consultation is published in response to Doug Richard’s independent review of apprenticeships, which looked at how apprenticeships in England can meet the needs of the changing economy.
Richard said apprenticeships should be more firmly in the hands of employers and ensure that all apprenticeships are rigorous and responsive to employers’ needs.
The
Association of Employment and Learning Providers(
AELP) said that system will come with as many potential downsides as it will with benefits.
AELPrepresents providers who train around 75% of England’s apprentices.
It said the proposals all require new systems of funding, inspection, assessment and compliance and are in no way a simplification of the existing system.
In particular SMEs will find it hard to navigate their way around the new systems when they may only have one or two apprentices.
AELPchief executive Stewart Segal said:
“We should be considering a total review of the future of apprenticeships, which is after all what Doug Richard advocated, rather than deal with the funding options separately.
AELPsupports the view that funding should be more responsive to the needs of employers.
“We have considerable doubts over whether the PAYE proposal would actually bring more employers into the apprenticeship programme.
“In fact, it might put smaller businesses off. The co-funding option might have merit if it properly recognises the contributions which employers make towards an apprentice’s framework achievement.
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AELPwill be pressing ahead with its own consultation of employers and research to try and ensure that the way forward is properly evidence-based. If we want to build on the major growth in apprenticeships over the last ten years, then it is vital that we get this reform right.”
The PAYE system appears to require an employer to interact with the government department, a training provider, an assessment body, HMRC and an inspection body.
These multiple contacts and contracts will be a major barrier to entry for a small employer looking to take on just one or two apprentices. Currently training providers support SMEs and avoid the need for the employer to get involved in claims and contracts.
AELPsaid any smaller employers will not have sufficient National Insurance payments to cover the cost of training, so there will also be a need for a payments system from HMRC to employers.