Head of Business Development at QA Apprenticeships, Ben Sweetman discusses the new apprenticeship funding model that will come into effect from 1 May 2017, and what this means for employers and for skills development in the UK.

The proposal for the new apprenticeship funding model post-levy has been published. I’ve never so eagerly awaited funding rules, and am relieved to say I have not been disappointed with the latest release.

We’ve had the EU referendum, a new Prime Minister, a new Skills Minister and the Department of Education has taken over apprenticeships (in place of the Department for Business, Innovation and Skills (BIS)). So, since the last government update about the levy, there have been a few changes to say the least.

As a result, it was not a foregone conclusion that everything in the August update would come out in line with what was previously planned by different members of government. But it came as a great relief to finally read the latest update, and find it is consistent with previous policy - and has a few bits of extra, unexpected good news thrown in.

What are the key updates to apprenticeship funding?

In a nutshell - for smaller employers the current Trailblazer pilot funding model (which QA is running right now) offers a better financial deal than the model that will be in place from May 2017. But the new model is much simpler and has other benefits for all employers - large and small:

  • There are more funding bands to work with, but overall, it’s a simplified model.
  • There are 15 bands and all the apprenticeship standards (aka ‘Trailblazers) and frameworks have an allocated band.
  • In the short-term until the changes come into effect on 1 May 2017, all employers can still access the Trailblazer pilot funding model, which includes numerous cash-back incentives.
  • In the long-term, it will be a simplified arrangement for employers - the number of cash-back incentives has been reduced and the initial employer contribution payment will be reduced from one-third to 10 per cent. This results in fewer transactions taking place between government and employers, and therefore a much simpler model.
  • There will be simplified eligibility criteria, especially beneficial for large employers, which means apprenticeships can be used to upskill or reskill candidates (as long as their existing qualifications are not in a similar subject area).

What are the benefits of the new model to employers?

  • For all employers, but particularly those with large levy pots, the proposed eligibility will be enormously helpful. It will provide new flexibility for how businesses can utilise apprenticeships, whilst staying true to the spirit of developing significant new skills in the UK.
  • For non-levy payers, there is a much simpler model for SMEs, with lower initial contributions than the Trailblazer pilot led us to expect.

Predications from history: For skills, as with sport

So, what impact do we foresee these changes having on skills in the UK? (This will feel a bit of a tangent at first, but bear with me.)

The whole nation thoroughly enjoyed Great Britain’s performance and success in the Olympics last year, but I also remember a time when we were dreadful, not least at the 1996 games in Atlanta where we managed only one gold. Given that we won five in a single day in Rio it shows how much has changed in 20 years.

I couldn’t resist doing a bit of research on this, and found a paper on sports policy since 1948, and the history of GB’s medal tally from Wikipedia.

What struck me is the role of government policy. During the 1980s, sport slipped down the political agenda, both for elite sport, but more strikingly the sale of school playing fields:

‘Some 5,000 fields across the country were lost during the 1980s to new building development and, with teachers in dispute over pay and conditions, school sport went into a period of pronounced decline.’1

What has this got to do with apprenticeships?

With sport, as with apprenticeships, there is a delayed reaction in the impact of government policy. The decline in 80s school sport arguably led to the poor showing at the 1996 Olympics (and, come to think of it, maybe our dreadful cricket teams too).

Similarly, as the article notes, John Major will not get the plaudits for this Olympic performance, but he did change the tide of policy and funding for sport in the 1990s. This was followed by National Lottery funding, for both grass roots and elite sport, and increased investments in the run-up to the Beijing and London Olympics.

Elite sport funding has risen from £58m in 2000 to nearly £350m for the Rio games, including the Paralympics. It has taken 20 years of consistent policy and funding to deliver these incredible results.

Building a pyramid of skills for the future

I would argue the levy and new funding rules will pay back its investment faster than sports funding ever can. An apprentice can go from starting their programme to being productive for a business in months, not years.

Equally, we (government, employers and training providers working together) are creating thousands of apprentices, not just one gold medal winner.

Within one year of the levy starting, we could provide a new supply of 20,000 young technical professionals - making an immediate difference to employers and to the supply of skills across the industry in the UK.

Given a 10 to 20-year horizon, we might well look back on this as the turning point for technical education and the transformation of the wider workforce.

I wholeheartedly believe that the apprenticeship levy and the new funding model presents an opportunity for all businesses - small or large - to become more productive and develop a pipeline of talent (thousands of gold medal winners if you will) with the technical and digital skills our industry needs for the future.