Tribal Group Blog

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Apprenticeship funding band reductions. What will the impact be?

Posted by Tony Allen on September 3, 2018

August is normally a quiet time in the wider world of education and skills, but a little like the weather, things this summer have remained quite hot! One of the reasons for this is the review of funding bands for a number of the most popular apprenticeship standards.

Earlier in the year, the Government announced that 31 apprenticeship standards were in scope for a review of their funding bands, and that any revised rates would apply from August 1. In the intervening period, trailblazer groups have been asked to submit evidence to justify the actual costs of delivery. I have spoken to a number of the trailblazer groups involved in the reviews, and with one exception, they all submitted costings that were at, or close to the original funding band.   

For its part, the IfA has been quite silent on the progress being made with the reviews, but the trailblazer groups themselves have now started to release the results. Some of the most popular standards are all seeing their funding bands reduced. Examples are: Chartered Management Degree Apprenticeship reduced from £27k to £22k, Team Leader / Supervisor standard from £5k to £4k, and the Operations / Departmental Manager from £9k to £7k. Other reductions from the 31 being looked at are expected. These changes are due to take effect from November 1.

One of the main frustrations being expressed by trailblazer groups is that the information on the actual cost of delivery that they are supplying to the IfA appears to be being ignored. They are concerned that the IfA is not being transparent enough in explaining how it is reaching its decisions, usually to reduce the funding band of the standard.

So why is this, and what will the impact of these changes be?

"I have spoken to a number of the trailblazer groups involved in the reviews, and with one exception, they all submitted costings that were at, or close to the original funding band." 

The IfA said that the original rationale for the reviews was that employers were not negotiating the rate hard enough, and too many standards were being agreed at the maximum band value. This was always an interesting argument, as I am not sure how, by reducing the funding band, employers would be more willing to negotiate? Surely a reduction would reduce the opportunity for negotiation, not increase it?

Now there is an argument to say, that when you reduce the price of something often volumes go up, and given the current low number of apprenticeships, perhaps the band reductions should be welcomed? In the case of apprenticeships price is certainly not the only important factor, quality is at least as important, and many employers expect their training provider to deliver a quality product.

"one of the main frustrations being expressed by trailblazer groups is that the information on the actual cost of delivery that they are supplying to the IfA appears to be being ignored."

In my view, the fact that there is a price tag associated with each apprenticeship standard, leads employers to think of that as ‘the price’. Many employers are not experts in the apprenticeship field, or at least in the levy environment. I have talked to employers who have said to me, “the government must think that it is worth £5k, as that is the published maximum price”, and therefore they do not negotiate. If the IfA thinks that employer negotiation is important in this process, then the answer is to scrap all apprenticeship bands, and tell employers to go out to the market and agree a price for themselves, with no ‘benchmark’ from government.

Trailblazer groups are concerned that there is some lack of transparency from the IfA as to how it is calculating the new bands. In the face of their evidence of the actual cost of delivering the training, the scale of some of the reductions is worrying. Take the Chartered Management Degree Apprenticeship £5k reduction. Assuming that it needs to, it will be a challenge for any university to reduce the cost of delivery to this extent. Significant changes will be required, and I am certain that some elements of quality will be reduced.   

I am concerned that these initial reductions that we are seeing, could be the tip of the iceberg, and that many more will follow. Training providers are worried that more existing standards will have their banding reduced, and those not yet approved will be awarded much lower bands. One provider who I spoke to recently expressed their concerns as follows.

“We are beginning to see the era of £2k per year becoming the norm for some Level 2 and 3 apprenticeships. I hope that this doesn’t happen, as quality will be reduced, and there will be less choice for employers as fewer providers chose to operate in that part of the market”. 

So, are the reductions about increasing the number of apprenticeships? Personally, I believe that the 3 million target is now effectively undeliverable, and that this has been known for some time. The current review of funding bands is not an attempt to increase the numbers. Price is a relatively minor factor in the apprenticeship market. Most employers quite rightly expect more than just delivery for the cheapest price.

So, if not about increasing numbers, why is this being done? There are two reasons in my view. Firstly, management and degree apprenticeships in particular have come under some criticism from sections of the vocational skills world. The pricing reductions we are seeing to these types of apprenticeships is a way of re-establishing the distinction between full-time degrees and apprenticeships, and company funded management training courses and management apprenticeships.  Secondly, given the current level of under spend is the Treasury eyeing up unspent levy and looking to use it for other things, such as the introduction of T-levels?

I see these reductions, and those yet to come, as benefiting no-one. There is a huge risk that we will see a reduction in quality, less employer choice and the real benefits that apprenticeships can bring to the lives of young people in particular, and the economy as a whole, undermined.

To keep up to date with all the changes to apprenticeships, visit our Apprenticeship Information Hub with more unmissable blogs, recorded sessions from industry experts and free guides.

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Written by Tony Allen

Tony Allen is CEO of Allen Apprenticeships and Skills. His company provides management support to employers, training providers and colleges around all aspects of skills issues in general, and apprenticeships, including the Levy, in particular. Prior to setting up his own company in June 2016, Tony was the Skills Funding Agency’s (SFA) Deputy Director for the Large Companies Unit. His team managed the relationship with all employers who held a direct contract with the SFA. Prior to this role, Tony held a number of appointments with the SFA and Learning and Skills Council (LSC). These included, Area Director for Kent and Medway, Area Director for the South East, and also Regional Skills Director for the South East. Tony joined the LSC in 2002. Prior to joining the LSC, Tony spent 25 years in the Hospitality and Catering industry. This included 17 years with Whitbread PLC in operational, HR and strategic roles.