Providers turning apprentices away as non-levy cash dries up

FE Week have reported what many providers in the industry are currently experiencing when it comes to apprenticeships…

Training providers’ non-levy funding is running dry and some are even having to turn apprentices away – but the government can’t offer more cash as it doesn’t have any left in the system.

The unprecedented issue, which one sector leader has described as “market failure”, comes just weeks after the Department for Education launched a new campaign to drive up the number of apprenticeships in England.

Around £500 million was allocated by the Education and Skills Funding Agency for delivering apprenticeships to small employers for the 15 months from January 2018 to March 2019 – a major fall on the £1 billion that was available for this provision in the previous 12-month period, according to a previous estimate from the Association of Employment and Learning Providers.

We can’t put more 16- to- 18-year-olds on programme because we haven’t got the funding

Nearly 700 providers currently share the pot but many started to feel the financial strain towards the end of last year after being denied opportunities for in-year growth funding, and some have now run out of the cash altogether.

“We can’t put more 16- to- 18-year-olds on programme because we haven’t got the funding,” said William Howarth, the co-founder of Cheynes Training, which trains hairdressing apprentices across the UK.

“We’re turning people away. We are confident we could have had another 120 learners on over that November to March period.”

In November, FE Week revealed that the Institute for Apprenticeships and Technical Education’s chief operating officer Robert Nitsch said there could be a £500 million overspend on the apprenticeship budget in 2018/19 – which would explain why the government can’t offer any more non-levy funding.

The AELP is now advising its members to be “very careful in calculating the risk of going ahead with new starts as it is “still no nearer resolving the medium- and longer-term issue of how SME [small and medium-sized] apprenticeships will be funded as the levy gets consumed by the levy-paying employers”.

“Now the infamous IfA slide on levy spend is official, our immediate concern is the tank running dry for non-levy paying employers,” said AELP boss Mark Dawe.

“Several training providers started reporting before Christmas that they were up to the hilt on their contracts.

“This number is growing, which means smaller businesses will be starved of apprenticeships.”

The ESFA said last week that it is reviewing providers’ delivery on current contracts and could release “over delivery” for some.