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Apprenticeships: funding reforms risk 'corruption' and 'fraud' warns training provider

The head of a leading training provider has attacked the government’s planned apprenticeship funding reforms, warning they could be open to “corruption” and “enormous fraud”.

Speaking at the Apprenticeship Debate in London yesterday, John Hyde, executive chairman of Hospitality Industry Training (HIT), described the reforms as “throwing the baby out with the bathwater” and criticised skills minister Matthew Hancock.

In the Chancellor’s Autumn Statement, it was announced that in future employers will receive direct funding for apprenticeships from HM Revenue and Customs as part of an effort to put them “in the driving seat” of work-based learning reform.

Employers are also developing new standards for apprenticeships and assessments to go with them.

Both reforms follow on from recommendations in the 2012 Richard Review of Apprenticeships led by American businessman Doug Richard.

Mr Hyde told delegates at the event, organised by the Association of Employment and Learning Providers, that the “untried and untested” reform was being introduced for “no good reason other than the whim of an American entrepreneur and a weak minister.”

He warned that funding employers for apprenticeships through the Pay as You Earn (PAYE) system could carry a “serious danger of corruption”, because employers could remove apprentices after six months and take a break from PAYE.

But Jennifer Coupland, deputy director of the BIS/DfE joint apprenticeships unit, denied the system was untested and said the experiences of the eight so-called "trailblazer" employers, who are developing the new apprenticeship standards, were already helping to adapt and change the policy.

A technical consultation on the funding reforms would be launched in the next few weeks, she said.

However, she did accept that the 24+ learning loans for apprenticeships, which was scrapped earlier this year after applicant numbers fell dramatically, was the “wrong policy for this type of programme.”

During her presentation Ms Coupland revealed that the next phase of the trailblazers scheme would have a different mix of employers those included in the first phase, including professional services and craft industries.

She also confirmed that from 2017/18 all new apprenticeship starts would be on the new apprenticeship framework.

Earlier, in his opening address, AELP chairman Martin Dunford praised the progress made on apprenticeships, saying they now seem a “credible option for many people.”

He said continuous improvement was needed but warned that the views of employers need to be properly listened to in any future reform.

“It is too easy to say ‘this is what employers tell us they want’,” he said. “Employers are not one species.”

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