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Apprenticeship funding is under pressure… but we have a new apprenticeship and skills minister

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A study by the Association of Employment and Learning Providers (AELP) and Public First on apprenticeship levy funding has shown that lowering the £3 million annual payroll threshold to £1 million would not generate enough revenue to meet the funding shortfall for SME apprenticeships. 

The extra revenue gained by lowering the threshold to £1 million would only be £400 million, while increasing the number of levy payers threefold. The National Audit Office has previously calculated that existing levy employers would use up the entire £2.8 billion funding pot, says the AELP, leaving little for SMEs. Before the levy, SME apprenticeships cost £1 billion annually.

The AELP argues that, in any case, lowering the £3 million threshold “would not be welcomed by thousands of SMEs facing a new ‘tax’, at a time when smaller businesses are already dealing with an uncertain economic outlook and other cost pressures.” They have called for the restoration of £1.5 billion public funding for apprenticeships in SMEs.

Critics of the study, however, have referred back to a 2015 plan for all employers to contribute to a national apprenticeship fund, netting an estimated £5 billion.

Apprenticeship standards funding bands

Meanwhile, apprenticeship standards funding bands have come under scrutiny by the Institute for Apprenticeship and Technical Education, who launched a consultancy exercise in response to employers’ demands for more transparency in how funding bands are calculated. The Institute’s Impact Statement, however, analysed by FE Week, revealed that under all three of the assessment mechanisms proposed, eight out of the nine standards examined would lose money.

The Institute argues that the new framework would only apply to new standards. However, existing standards would be assessed with a version of the chosen framework were they to be revised.

Availability of skills

The availability of skills in the UK is under pressure from the combined impact of Brexit, the introduction of a points-based immigration system and underfunding of the post-16 FE sector. The Johnson government promised a significant upward swing of funding and investment in skills in their election manifesto, but concrete plans have still to materialise.

New Apprenticeship and Skills Minister

In one decisive move, however, former degree apprentice and Conservative MP Gillian Keegan was appointed apprenticeships and skills minister this month, the first apprenticeship and skills-specific brief since Anne Milton resigned in July 2019. She had previously served as co-chair of the all-party parliamentary group for apprentices and was appointed an ‘apprenticeship ambassador’.

Richard Alberg, CEO of MWS Technology, said:

“There needs to be some sustained thinking at the governmental level to rectify funding shortfalls and give apprenticeships a significant role in a post-Brexit skills uplift. We continue to wait for the government’s plans with eagerness.

“It is, however, excellent news that we now have a dedicated apprenticeship and skills minister in the Department for Education, who has a strong background and reputation in the apprenticeship sector.

“We look forward to a positive engagement by Gillian to address the skills deficit and channel much-needed investment and support in the apprenticeship and training sector.”

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