Apprenticeship Funding Fever

by Mark Corney


The debate on apprenticeship funding is reaching fever pitch. The Coalition consultation* closes in less than two weeks, the Liberal Democrats** and Labour*** have set out their stalls and the Conservatives will do the same at the end of the month.

In recent days, the debate on the Coalition consultation has shifted away from adult apprenticeships to 16-18 apprenticeships. Mandatory employer cash contributions to adult apprenticeships seem to be a done-deal and PAYE looks the favoured model for distributing public funding.

Less clear, however, is whether 16-18 apprenticeships will be partially funded with mandatory cash contributions, partially funded with voluntary cash contributions or fully funded as now. There is then the issue about whether the public subsidy – at whatever level – is distributed through the PAYE system.

The Liberal Democrats, as distinct from the Coalition, support distributing the public subsidy for adult apprenticeships to employers through the PAYE system, though they make no mention of mandatory cash contributions. But the party seems content with the present system of fully funded 16-18 apprenticeships allocated to providers.

Labour, on the other hand, has rejected devolving apprenticeship funding to each employer, use of the PAYE system and mandatory cash contributions. Instead, the party proposes to devolve the £1.5bn youth and adult apprenticeship budget to employers on a collective basis to Industrial Partnerships and reformed Sector Skills Councils.  

Mandatory Cash Contributions to 16-18 Apprenticeships

In advance of the Campaign for Learning's seminar on the Government's current consultation reform for Apprenticeships, 19th September, Mark Corney asks whether the funding model for 16-18 apprenticeships will include mandatory cash contributions from employers.


Mandatory cash contributions by employers is a common element of the Direct Employer Payment Model, the PAYE Employer Payment Model and the Provider Payment Model outlined in the apprenticeship funding consultation.*

But the critical question is whether employer cash contributions are required as a pre-condition for the release of public funding for 16-18 apprenticeships as well as adult apprenticeships.

The case for concluding that the Coalition Government is indeed considering the proposition of mandatory employer cash contributions to 16-18 apprenticeships is compelling.

Apprenticeship Funding Reform: The Big Issues

In advance of the Campaign for Learning's seminar on 19th September, Mark Corney assesses the Government's current consultation on funding reform for Apprenticeships in England and sets out the issues.

Money will ultimately determine the outcome of the apprenticeship funding consultation.* Who pays, how much they will pay and who controls the purse strings are the questions that matter. 

Getting the financial incentives wrong in small scale pilots is permissible. Getting them wrong in large mainstream programmes such as apprenticeships is not an option. 

The Coalition Government published its response to the Richard Review in the Spring. Yet the ministerial foreword to consultation paper published in July tellingly states “one crucial aspect of this reform agenda was deliberately not addressed – funding.”

Saving BIS a billion

Potential options for savings from Higher Education and Adult FE

Planned revenue spending by the Department for Business, Innovation and Skills in 2014/15 is £13.8bn. If the Treasury and BIS agree on savings of 8% in 2015/16, the Spending Revenue on the 26th June would confirm savings of £1.1bn.
The rumour in the FE sector is that the entire saving will be made from the adult FE budget. Meanwhile, the HE sector has convinced itself that universities will bear the brunt of the entire savings through cuts in HEFCE funding and downward pressure on fees because of competition.

The truth is that neither of the sectors will face the full £1.1bn of cuts.  A package of savings across both adult FE and HE is the most likely outcome.

Adult Apprenticeships: Funding the User

by Mark Corney

The signs are that the Coalition Government is intent on routing public funding for adult apprenticeships through the user rather than the provider.

The question Whitehall must resolve in Spending Review 2013, due to be published on the 26th June is whether the user is defined as the individual or the employer.

Why no 18-24 traineeships?

by Mark Corney

One by one representative bodies have proclaimed surprise and disappointment at the decision by the Coalition to restrict ‘traineeships’ primarily to 16-18 year olds and delay them for 18-24 year olds.

Economists would point out that they have been surprised because they have focused on the wrong variable.

The delay is not to do with the budget for delivering 18-24 traineeships paid to providers and funded by BIS but the cost of benefits trainees will receive paid by DWP. The failure of the framework document* to have ‘DWP’ on the front cover gives the game away.

Leading on LEPs and Adult FE

by Mark Corney

Both the Department for Business, Innovation and Skills, and the Department for Communities and Local Government have joint responsibility for network of 39 Local Enterprise Partnerships (LEPs).

The ‘Business, Innovation and Skills’ select committee of the House of Commons has recently proposed that BIS should be the lead department for LEPs. In addition, the select committee supports the idea of a single-pot devolved to LEPs and core cities and expects the Government to set out its scope and size in the formal response to the report.*

Assigning to BIS lead-department status for LEPs would be an intriguing move. The same department is also responsible for the £1.8bn adult further education budget.