Government announces apprenticeship funding ‘shake-up’

The government has announced new plans to ‘shake up’ apprenticeship funding. The changes are aimed at giving employers greater control over the apprenticeship process and may result in employers receiving direct payments to purchase the apprenticeship training they choose.

The announcement comes as the government begins a consultation on the funding reforms proposed by entrepreneur and former TV ‘Dragon’, Doug Richard in  The Richard Review of Apprenticeships, published in November 2012.

There are three main models being proposed to begin with:

  • Direct Payment: businesses register apprentices and report claims for government funding through a new online system. Government funding is then paid directly into their bank account
  • PAYE Payment: businesses register apprentices through a new online system. They then recover government funding through their PAYE return
  • Provider Payment: government funding continues to be paid to training providers, but they can only draw it down when they have received the employer’s financial contribution towards training

Business Secretary, Vince Cable commented:

“Employers are the best people to judge what training is worth investing in. These reforms will mean just that. It gives them the power to train their staff to make sure their skills are relevant to the company, while choosing from the wide range of courses available.”

“These measures are all part of the wider reforms the government is making to the apprenticeship system. By putting quality ahead of quantity and giving the training that companies actually want, we are helping to create jobs and support business.”

In addition to these longer term plans, the government is also extending the Apprenticeship Grant for Employers (AGE) for another year, allowing companies with 1,000 employees or fewer to take advantage of a £1,500 Apprenticeship Grant. Latest figures show that almost 30,000 young people have been taken on under the current grant.

Skills Minister, Matthew Hancock said:

“Small and medium sized businesses are the lifeblood of our economy and by extending the £1,500 grant for a further year we will give them the skills they need to grow and help 35,000 more young people into meaningful employment.”