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Government sent back to the drawing board on apprenticeship funding reforms

More work is needed to design a new funding system for apprenticeships in England before employers can be put “in the driving seat”, ministers said today.

The government had consulted on two options to put employers in control of apprenticeship funding; either through the pay-as-you-earn system or a new system of credits.

But today it said feedback from more than 1,400 respondents had shown no clear preference for either option, with concerns over both around administration and cash flow.

In a statement the government said: “While putting employers in control of apprenticeship funding is a non-negotiable part of the reforms, it is clear from the feedback received that further detailed design work is needed before there can be a final decision on how this would work in practice.”

While FE sector bodies welcomed the announcement and the fact the government had listened to their concerns, there were warnings that further delays could be damaging.

Adam Marshall, executive director at the British Chambers of Commerce, said: “It is important that the government provides clear direction to businesses on funding reform as soon as possible, so that firms have the security to invest in developing and training their workforce.

“We are concerned that this has already been an 11 month consultation, with an unclear outcome, and the general election could prolong uncertainty, potentially discouraging some firms from investing in apprenticeships.”

Neil Carberry, director for employment and skills at the CBI, said the government and businesses needed to “get their heads together to “hammer out” how the system would work.

“We need as many companies as possible to be offering apprenticeships, but that can only happen if the system is simple and flexible enough to meet the needs of smaller businesses.”

David Hughes, chief executive of the National Institute of Adult Continuing Education (Niace), said: “It is complex to get this right ... and I am pleased with the caution about how quickly a simple system can be established.”

The Association of Employment and Learning Providers (AELP) said it was clear that employers wanted to be more engaged in the management and delivery of apprenticeships but did not want to be “tied up” in administration and funding. 

It is working with the Department for Business, Innovation and Skills, the Education Funding Agency and the Skills Funding Agency to develop a model to encourage more employers to get involved .

Skills minister Nick Boles said he looked forward to working with employers to develop a funding model that was “simple, transparent and easy to use”.

He said the funding reforms would continue to be developed alongside the apprenticeship trailblazer programme, in which more than 1,000 employers of all sizes are designing new standards in a number of occupations.

Related stories:

Apprenticeships: funding reforms 'won't be a burden', pledges minister – October 2014

Apprenticeships: funding concerns remain despite government statement - August 2014

Apprenticeship funding reforms 'could cost places', employers warn - May 2014

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