The case for routing apprenticeship funding through employers

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With the Skills Minister Matthew Hancock today announcing the second round of Employer Ownership of Skills Pilot, it seems an appropriate time to explore the case for directing apprenticeship funding through employers.

Whilst the Employer Ownership of Skills Pilot is a move in the right direction, the concept of putting the employer in the driving seat by giving them greater purchasing power is not a new one.

Let's look back a few years to the Leitch Review. Within this Review clear recommendations were set out to help strengthen the employer voice and increase employer engagement and investment in skills.

The result, Leitch predicted, would be employers having more influence over the skills strategy within a simplified system and there would be greater incentives for businesses to invest in skills across all levels.

Fast-forward six years and we are expecting Doug Richard to publish his review on the future of Apprenticeships in the coming weeks. Within this we again expect recommendations to create a training market which is responsive to the needs of industry and a possible way of achieving this would be routing funding directly through the employer.

In our recent Skills for Growth report we suggested one way to do this may be through reductions in national insurance contributions. Although we must explore further exactly how this will work in practice to ensure there is no additional burden on business, the bottom line is that we need to be looking at models that lead to a more responsive and competitive training market.

Our survey clearly demonstrated that such as market currently does not exist. Despite best efforts from government, there has been little improvement in the training market with regards to responsiveness of providers, relevance of courses and access to funding.

43% of manufacturers disagreed that access to funding was easier now than two years ago compared to only 17% that agreed.

Only one in five agreed it was easier now to find an appropriate training provider.

Initial objections to such proposals may point towards the possibility of deadweight, local delivery and the need for pre-pack apprenticeships. But these either don't exist, already exist in the current model or can be overcome.

There will be others that believe that skills funding should be designated to local bodies. This would not be a welcome move by businesses - we have been there before (remember Learning and Skills Councils?) and it hasn't worked, the last thing we need is another layer of bureaucracy between employers and providers.

We know that manufacturers are willing to invest in Apprenticeships (two-thirds of manufacturers we surveyed already offer Apprenticeship programmes), but if we are to really drive further investment we must start acting on the recommendation made time and time again – to create a market where customer is king.

How do we achieve this? We believe by routing a larger proportion of funding directly to the employer.

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Head of Education & Skills Policy

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