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What do the latest funding changes mean for apprenticeships?

April 2024's apprenticeship funding is promising to transform the sector - but is it just papering over the cracks? Read on to learn about all the changes.

£60 million of funding for employers, 20,000 new apprentices and a 20% increase in the apprentice minimum wage.

In a time of substantial change for apprenticeships, perhaps the most surprising aspect of the major injection of funding we witnessed in April 2024 is that it is far from the first of its kind.

If you want to quickly understand what the most recent changes to funding are – and more importantly, what they mean for EPAOs and training providers like you – read this run-down for the key facts and the all-important context for EPAOs and training providers.

 

What are the latest changes to apprenticeship funding in April 2024?

Between the start of a new fiscal year, the Spring Budget, and various other measures announced by the government in the interim, a number of changes to apprenticeship funding have cumulatively come into effect in April 2024.

Each of them has been headline-worthy, but what unites them – if anything - is the focus on supporting employers to hire more apprentices.

These have sought to utilise the power of large employers – levy payers, with an annual salary bill of £3 million – to support small employers (non-levy payers).

Let’s explore these changes in detail:

 

Apprenticeship funding changes for levy-paying businesses

The most significant change is that large employers who pay the apprenticeship levy will be allowed to transfer 50% of their apprenticeship levy allowance to another business. This was formerly 25%.

The aim of this, ostensibly, is to transfer funding ‘power’ from large companies to SMEs, empowering the latter to (collectively) hire ‘up to 20,000’ more apprentices.

At the same time, the incentive for large companies is to avoid a ‘use-it-or-lose-it’ scenario, wherein the funds they pay into their levy ‘pot’ effectively expire.

However, it was the changes to funding for non-levy-paying small businesses that captured the headlines beyond our sector.

 

Apprenticeship funding changes for non-levy-paying businesses

As well as making non-levy-paying businesses the beneficiaries of more funding from levy payers, the government announced its aim to ‘fully finance any apprentice aged 21 or under in small businesses’

Concretely, this means covering the full cost of training for apprentices in England and Northern Ireland. This change is intended to increase apprenticeship provision by reducing the salary burden on small businesses.

That being said, one final change made the headlines.

 

Other significant changes to apprenticeship funding in April 2024

Alongside the headline-dominating £60 million injection into apprenticeship funding, a 20% increase to the apprentice minimum wage will see the under-19/first-year apprentice salary rise from £5.28 to £6.40 – this will be covered by individual employers.

With a further £2.7 billion to be made available for the DfE’s apprenticeships budget, the funding available would seem to be almost overwhelming.

Which begs the question – why do some feel that this isn’t going far enough? 

 

Reading between the lines

As we have discussed previously – and as you will have no doubt witnessed yourself – apprenticeships are occupying a pivotal role in a wider national skills strategy. From closing skills gaps to spearheading a green transition and even giving young people a better path than ‘low-value’ university degrees.

All of which, to an extent, are true: apprenticeships will be vital for our future workforce.

However, there’s little doubt that, ahead of an election year, apprenticeship growth is just another battleground for the incumbent government and its challengers, where funding promises are hoped to swing votes one way or the other – at times drawing attention away from other unresolved issues related to funding and its impact.

 

What are the wider issues?

Fundamentally, the (largely well-found) optimism around apprenticeships rests on some shaky foundations as regards funding.

The levy itself, designed to boost apprenticeship numbers, has been a point of contention since it was introduced in 2017, not least of all because of the additional budgetary pressure it puts on businesses (which is partly why its introduction resulted in a sharp decrease in apprenticeship numbers).

In addition, turmoil in funding band changes in 2023 contributed to a swathe of high-profile training provider bankruptcies – with inflation and unpredictable ‘top-down’ changes contributing to the disappearances (which, of course, affected thousands of apprentices).

Taken together, there’s a simple summarising point – despite all of the fanfare and funding – there are still fewer apprentices starting in 2024 than there were seven years ago.

So, with all of this in mind, what is the learning for EPAOs and training providers, who are still very much affected by this most recent injection of funding that will flow through employers to them?

 

What is the way forward for EPAOs and Training Providers?

When it comes to funding, very little is certain – particularly in an upcoming election year that could uproot the foundations of apprenticeship funding (if, for example, comments from a Labour representative at AAC are to be believed).

That is why, as we said during the turmoil that affected training providers earlier in the year, EPAOs and training providers must focus on one thing that they can control – providing an exceptional quality of apprenticeship delivery.

With 44% of apprentices dropping out before their end-point assessment, and quality of delivery and ‘lack of support’ being cited as major concerns, the best opportunities for EPAOs and training providers lie in bucking that trend.

When apprentices are supported, they achieve more – but your best intentions only carry you so far, if you are held back by manual process, high admin burden, and organisational disarray.

That’s why, when it comes to managing every aspect of EPA – from registration to certification – you need a tool like epaPRO that automates what can be automated, provides a central hub for all of your stakeholder management, and frees up time for you to focus on providing the support that your apprentices need to succeed.

We can’t control every change that happens in the world of apprenticeships, but we can control the most important one – providing apprentice journeys that give candidates the confidence to succeed in the workplace.

If you want to learn more about epaPRO, and how it is making those delivering apprenticeships faster, more effective and more efficient, don’t hesitate to book a demo and see what it could look like at your organisation.

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