Insights Adapting to the next wave of apprenticeship reforms: a guide for employers
09 August 2018

Adapting to the next wave of apprenticeship reforms: a guide for employers

Adapting to the next wave of apprenticeships

Employers and apprenticeship training providers are preparing for the next wave of apprenticeship changes. Anticipated reforms could have a marked impact on how employers use their apprenticeship levy and timescales for spending their levy funds. Mel Nicholson, Seetec’s Director of Excellence, Apprenticeships and Skills outlines what the changes could mean for companies and how best to prepare.

In May this year, the Department for Education asked the Institute for Apprenticeships to review the funding bands for 31 apprenticeship standards. It requested the review to make sure that employers can access high quality apprenticeships and ensure employers get good value for money.

The Institute for Apprenticeships is due to make its recommendations to the Secretary of State for Education, who makes the final decision on funding bands.

What is a funding band?

A funding band is the maximum amount an employer can draw down from its digital levy account to pay for an individual apprenticeship. It’s also the maximum the government will pay towards (‘co-invest in’) an apprenticeship for employers who don’t pay the levy, or who have exhausted their levy funds and are eligible for extra government support.

Depending on the government’s awaited decision, apprenticeship funding bands may go up, down or stay the same. Here’s how each scenario might affect you:

What if funding bands are reduced?

If you’re a levy-paying business, an apprenticeship funding band reduction could bring benefits and challenges. In theory, a cut would give you more purchasing power and the opportunity to develop more employees through an apprenticeship programme. That includes existing staff or new recruits. But there is the risk that your current training provider can no longer deliver the apprenticeship within the new funding band. In this case, you could choose to ‘top up’ the payment to your provider with money from outside your levy funds. Or, as an employer you always have the option to shop around to find a new training provider who can deliver at a lower cost. But decide carefully - a training provider with reduced prices could mean unsustainable quality. 

You might also find that, if apprenticeships now cost you less, you face a levy underspend and risk losing your funds. This might mean your funds go to competitors, keen to draw down money for their own benefit. If funding bands are reduced it’s best to speak to your training provider quickly to make sure your levy funds don’t go to waste.

What if funding bands are increased?

An increase in funding bands may not impact your business that much if you have a well-established levy programme and good training provider arrangements. But if you’re currently struggling to attract training providers to deliver very niche apprenticeships because they’re not financially viable, a funding band increase could ease this problem. In this case, it’s well worth you reaching out to providers to see if they’d support your business.

A funding band rise could prompt your training provider to increase their fees in the future, meaning less of your employees are able to develop through an apprenticeship. This could mean you risk missing any targets for your organisation – something that would be of particular concern to public sector bodies, who are obliged to meet and report on targets. It’s best to speak to your training provider sooner rather than later to understand how any changes will affect your future costs and projected numbers. You should also discuss with your training provider what added value you would receive for any price increase.

Don’t forget you have the authority to negotiate and find another training provider if you’re unhappy with their costs or service. But it’s important to not solely make decisions on price. Also, compare the quality of the programme you are receiving.  Transferring to another provider, or adding providers to your supply chain can be easier than you think. Most apprenticeship providers can talk you through the process. Or you can find out more in this downloadable guide.

What if funding bands stay the same?

If funding bands stay the same for your preferred apprenticeships, there’s less for you to worry about. But it might mean you’re still not able to attract training providers willing to deliver very niche, low volume apprenticeships. If that’s a problem you’re facing, consider partnering with other businesses with similar skills needs, to increase your learner volumes and make yourself more attractive to training providers. You can now transfer some of your levy funds to other companies interested in apprenticeships, including your supply chain. There are some rules around this, so to avoid any pitfalls, it’s best to get advice from an experienced apprenticeship provider on how to work with other organisations.

If you’d like more advice about apprenticeship funding bands, how best to manage your levy or work in partnership with other businesses, contact Seetec today.