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August 02, 2013

Government plans apprenticeship funding changes

Businesses could receive direct funding to help pay to train their apprentices, under new plans to reform the current system.

Employers would also have greater freedom to choose training, which, according to ministers, would put "businesses in the driving seat" when it comes to apprenticeships.

The proposed changes follow a review of the current apprenticeship system, which was published in November last year and carried out by entrepreneur, School for Startups founder and former Dragons' Den investor Doug Richard.

If the Coalition's changes go ahead, delivery of funding will move away from training providers and to businesses, giving firms greater choice over how the money is spent.

Business secretary Vince Cable said: "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."

The government has proposed three new systems and the first ('direct payment model') would enable employers to register their apprentices online to receive money directly into their bank accounts.

The second ('PAYE payment model') would mean employers receive funding through their PAYE return. The third ('provider payment') would mean funding will still go to training providers, but they would only be able to access funds when the employer's financial contribution towards training had been received.

Some training providers have warned that placing responsibility with employers could impact negatively on both the take-up and quality of apprenticeships.

Stewart Segal, chief executive of the Association of Employment and Learning Providers, voiced particular concerns about the PAYE model. He said: "We have considerable doubts over whether the PAYE proposal would actually bring more employers into the apprenticeship programme. In fact, it might put smaller businesses off. The co-funding option might have merit if it properly recognises the contributions which employers make towards an apprentice's framework achievement."

The government is eager to point out that until mid next year companies with 1,000 employees or fewer can take advantage of a £1,500 Apprenticeship Grant for Employers. According to official figures, almost 30,000 young people in the UK have already been taken on under the current grant.

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