Apprenticeship funding reform in England: payment mechanisms and funding principles

07 March 2014

The Department for Business, Innovation & Skills (BIS) and Department for Education (DfE) has published a further, technical consultation on the following 2 options for directing apprenticeship funding straight to employers:

  • the PAYE model - explained in this consultation
  • a new model called the ‘apprenticeship credit’ - a simple online account that employers and government can contribute into, and which employers can use to buy training and assessment from registered providers.

BIS and DfE want to know your views on how they will issue funding for apprenticeships directly to employers. They want the standards of all apprenticeships to be raised to the level of the best, by making them more rigorous and more responsive to the needs of employers, so they can grow and compete.

The reforms announced in the Future of Apprenticeships in England: Implementation Plan last October is giving employers more control over the design of apprenticeships and their assessment. The first new apprenticeship standards, developed by employer-led trailblazers, have been endorsed and published on the Apprenticeships website. It is expected that the first apprenticeships, based on the new standards, will start in the 2014 to 2015 academic year.

Giving employers direct control over the funding of the external training and assessment of their apprentices will give them more influence to improve its quality and relevance. Building on the results of the funding consultation last summer and the funding principles announced in the Autumn Statement, this consultation sets out a core model that could be implemented either through PAYE or an Apprenticeship Credit, and seeks views on these two payment mechanism options.

CIPP comment

The initial consultation (August 2013) on options for funding included three payment models:

1. Direct Payment Model: Businesses register Apprentices and report claims for government funding through a new online system. Government funding is then paid directly into their bank account.

2. PAYE Payment Model: Businesses register Apprentices through a new online system. They then recover government funding through their PAYE return.

3. Provider Payment Model: 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.

Whilst the CIPP understood the reasons as to why the government would like to reform the funding process for apprenticeships, we strongly opposed the PAYE Payment Model as it would bring increased complexity to an already complex PAYE system, increased costs and cash flow issues. However it looks as though this additional technical consultation is including this very option.

Look out for a survey on this! The Policy team will be issuing one shortly to gather your thoughts on the two options - PAYE model and apprenticeship credit - to feed into the CIPP’s consultation response.

Our response to the initial consultation can be accessed through the link below.

CIPP response to apprenticeship funding consultation - September 2013