The Department for Business, Innovation and Skills (BIS) has launched a consultation that includes proposals for apprenticeship training to be funded directly through employers rather than through training providers.

The proposed funding reforms for apprenticeships that are included in the consultation are among ten recommendations, published last November in the government-backed Richard Review of Apprenticeships.

The report, commissioned by BIS, set out a series of reforms designed to modernise apprenticeships in England and give employers greater ownership of standard and curriculum selection for their individual apprenticeship programmes.

The three funding options under consultation include a direct payment, a PAYE and a provider payment model.

Under the direct payment model, businesses would register their apprentices and file claims for government funding through a new online system. State contributions would then be paid directly into the employers’ bank account.

The direct PAYE model would also introduce the direct online registration and reporting system, but government contributions would be recovered through PAYE returns.

The third model under consultation, provider payment, would continue to utilise training providers for processing government funds for placements, but the organisations would only be able to draw it down once they had received the employers’ contribution to training.

Launching the consultation, business Secretary Vince Cable said: "Employers are the best people to judge what training is worth investing in. These reforms will mean just that.

"It gives them the power to train their staff to make sure their skills are relevant to the company, while choosing from the wide range of courses available."

However BPIF chief executive Kathy Woodward said that the proposals would only suit larger employers and would not be effective for SMEs.

"Larger employers already have their own systems so they could easily make use of these proposals, but they don’t really show an understanding of SMEs," she added.

Woodward said that as they stood, the proposals did not consider the cost effectiveness of delivery for industry specific programmes and that although in principal apprenticeship reform was positive, in practical terms the proposals hadn’t been thought through for specialist providers.

"If an SME was given a chunk of money to develop its own apprenticeship scheme who is going to develop the standards, manage delivery or do the inspections? The infrastructure of costs would be a massive burden on an SME," explained Woodward.  

She added: "If many of our college courses have gone out of business, it is unrealistic that an individual SME without such resources could deliver this on its own."

"I have spoken to Vince Cable about it this week and he has assured us that he has taken our concerns on board and is trying to work out a solution."

The consultation, which closes on 1 October, is part of a wider BIS review of the apprenticeship system in England, kicked off last year by Jason Holt's review on making programmes more accessible to SMEs.

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