Training providers express concerns about potential impact of apprenticeship reforms on SMEs and would-be apprentices

“AELP recognises the need to encourage more employers to make a commitment to the Apprenticeship programme. We still believe that the routing of funding through employers will create a new barrier to some employers, especially SMEs getting involved in the programme and we welcome the BIS announcement that there will be a consultation on an alternative funding route for the ‘smallest businesses’ although how this is defined will be important. From our surveys and discussions with employers, they say they want to be more involved in the development of the Apprenticeship programmes but show no desire to take on the direct management of the funding.

We are pleased to see that there will be an opportunity to review the potential impact of the proposals. We know that SMEs and employer representatives have expressed some concerns about the pace of change but we hope that the period of review is not about when the changes will be made but whether the changes will deliver the improvements predicted.

“The proposals will bring a period of uncertainty for employers and training providers when we should be focussing on the changes that will create more high quality Apprenticeship opportunities, especially young people. We are pleased that the Government has listened to our concerns about maintaining the programme for 16 -18 year olds but we need to see whether the additional state contribution for 16 and 17 year olds will offset the cost of the new mandatory employer contributions. Mandatory contributions will be a barrier to the growth of the programme for those aged over 19, especially young people who are unemployed. We have made a number of recommendations to make the programme more responsive to employers’ needs and we will work with the sector to ensure that the funding system supports high quality training and development.

“Any HMRC system has to be designed so that bureaucracy is minimised and we have to retain the flexibility of the current system. We are very concerned that the opportunity is taken to reduce the investment in Apprentices at a time when we need more not less investment. We believe that there has to be a different approach for large business and SMEs. The majority of Apprentices are employed in businesses that only have 1 or 2 Apprentices and these employers will not want to take on the responsibility of directly managing the funding. There has to be a dual system that allows employers to choose whether to have a direct contract or work with a training provider that manages the funding. The current system allows employers to make that choice and we would support a position where more employers are given that choice.

“We share the objective of getting more employers involved in Apprenticeships. Our members deliver over 70% of the Apprenticeships and they will continue to work closely with their employers to maintain this high quality vocational option.

“We urgently need a review of the funding of Apprenticeships for those over 24 and the loan system because a fundamental change will encourage more people to progress to Advanced and Higher Apprenticeships, including the 20,000 extra Higher Apprenticeship places announced today.”

AELP will be commenting separately about the other Autumn Statement announcements on supporting young people into employment.