Apprenticeship funding rates may have to fall to pay for the rapid growth of places, the head of the National Apprenticeship Service (NAS) has said.

Simon Waugh said that recruiting 50,000 places more than planned was not going to create financial problems for the programme or be “a runaway train” because the Government could introduce financial controls, including changes to rates.

He said: “We will always look at rates. In the current environment, I don’t think there is anyone out there who doesn’t realise that there is constant pressure on cost. We are constantly discussing with SFA (the Skills Funding Agency) and BIS (the Department for Business, Innovation and Skills) about value for money.”

The decision would rest with the SFA, which recently pulled back from a proposal to cut funding rates by 10 per cent in August, on top of a 4.3 per cent cut this academic year, after objections from providers.

But the Association of Employment and Learning Providers said that a cut would make it hard for apprenticeship providers to maintain recruitment and quality of provision. A spokesman said: “The imposition of significant cuts in funding rates would make the task of expanding apprenticeships for young people much more difficult.”

While he said the NAS did not want a “stop-start situation”, Mr Waugh said a sudden spike in apprenticeship starts one year could be offset by a reduction in the next.

But he said so far, the extra growth had been paid for in a faster reduction of Train to Gain provision, and by colleges meeting demand by reducing recruitment to other courses.

He denied that growth put quality at risk, but conceded: “Can I say to you that every single apprenticeship is of the quality that we would require it to be? The answer quite clearly is no. But wherever in our view that delivery model is not to the very highest standard, we will investigate it.”

Mr Waugh defended the quality of programmes that have seen large growth, such as customer service in the retail industry, where employers such as Morrison’s added as many as 12,000 apprentices in a year.

“I think there is this old-fashioned snobbery around apprenticeships having to be high-end manufacturing - the BAEs, the Bentleys, the Rolls- Royces,” he said.

And he defended the growth in the number of older apprentices. “It’s miniscule. It’s a percentage of a percentage of a percentage,” he said. “I think we’ve got about 2,000 over-60s, but when you’ve got people working later in life, made redundant, and you have to completely reskill - why would a 60-year-old not need to do that as much as a 16-year-old?”

He said the number of 16 to 18-year-old apprentices would rise by a percentage in the “mid-teens”.

Original headline: Apprenticeships surge may lead to fall in funding rates