Ian Austin – 2016 Parliamentary Question to the Department for Education

The below Parliamentary question was asked by Ian Austin on 2016-09-02.

To ask the Secretary of State for Education, what estimate she has made of the potential effect of Skills Funding Agency proposals to reduce 16-18 apprenticeship funding on the finances of apprenticeship providers.

Robert Halfon

The aim for an employer-led system has been clear for some time. Our 2020 Vision Document published in December 2014 made clear the need for providers to respond to employer demand.

With the introduction of the apprenticeships levy, employers will directly purchase their own apprenticeship training – choosing the apprenticeship training they want to purchase and negotiating on price. This means we have to simplify the funding system to encourage employers to recruit more apprentices of all ages and from all backgrounds, including young people.

As a result of the levy we will be investing £2.5 billion in apprenticeships; that’s double what was spent on apprenticeships in 2010-11.

Our funding proposals will introduce a simpler pricing system with a maximum cost for each type of apprenticeship, regardless of age or location. We do not want to dis-incentivise employers from taking on young apprentices so we’re evening out the costs of each apprenticeship, and employers won’t have to pay more to give a 16 to 18-year-old their first step on the career ladder. We are also progressively withdrawing frameworks as standards become available so the funding difference for frameworks is a transitional issue.

We are also proposing to give employers and training providers an extra £1,000 each for every 16-18 year old apprentice they take on. Providers will need to adapt but we’re making sure there is more money going in overall.

We’ve published these proposals well in advance of the new system coming in so that providers have time to prepare. The new funding model will only apply to new apprenticeship starts after May 2017, so providers will continue to benefit from stability in funding for apprentices already in the system. The current survey on the draft proposals concluded on 5th September, and feedback will inform the final policy which we aim to publish in October.