Options for employers are essential for Apprenticeship funding reform

1st October 2013

Because of the variety and diversity of employers across the country it is inevitable that a ‘one size fits all’ funding model for Apprenticeships would not be appropriate. Therefore, NIACE believes all employers should be given the choice of which of the three proposed models works best for them. This is part of NIACE’s response to the Government’s Consultation on Funding Reform for Apprenticeships in England.


The Government have proposed new options for the delivery of Apprenticeships in its consultation.


  • Model 1: Direct Payment Model – businesses register apprentices and reclaim government funding through a new online system.  Government support is then paid directly into their bank account. NIACE believes this will work best for large employers who already have a direct contract with the Skills Funding Agency.
  • Model 2: PAYE Payment Model – Businesses register apprentices through a new online system and then recovers the government subsidy through their PAYE return. NIACE believes this will suit most other employers, apart from those identified below.
  • Model 3: Provider Payment Model – Registered training providers will make claims for government funding, once they have received the employer’s financial contribution. NIACE suggests that this model needs to be available to support micro businesses and SMEs who might not want to take on the extra costs involved in managing Model 1 or 2. This will also enable specialist providers to ‘pull down’ funding  – from the newly proposed ‘inclusion fund’ – to support new employers to enter the Apprenticeship market and to encourage participation from non-traditional Apprentices

Dr Fiona Aldridge, Head of Learning for Work at NIACE, explains:


“NIACE fully supports the reform of Apprenticeship funding which should encourage greater employer-ownership of Apprenticeships.  There is a danger, however, that none of the three proposed models, if they were implemented universally and in isolation, would offer employers, providers and apprentices a satisfactory solution. That is why we are calling for a system which lets employers decide which Model works best for them.”


“NIACE fully supports the Government’s proposal to make variable contributions towards the ‘price’ of an Apprenticeship, in order to encourage participation by non-traditional apprentices and employers, by paying a higher intervention rate for certain types of provision.


“The new proposals will require increased cash contributions by employers towards the cost of their Apprenticeship training, and NIACE advocates the use of a proportion of these additional payments to create an ‘inclusion fund’.  This ‘inclusion fund’ should be used to widen Apprenticeship participation by supporting the engagement of appropriate non-traditional apprentices, for example Black and Minority Ethnic learners and adults with learning difficulties and/or disabilities, in Apprenticeships. 


“There are three investors in any Apprenticeship – Government, the employer and the Apprentice themselves. NIACE wants to see a new social contract between these three investors, with a charter to guarantee the rewards that an Apprentice will reap from participating. It’s crucial for the future economic well-being of the country that adults of all ages have the opportunity to take part in a high quality Apprenticeship, offered by  a diverse range of employers, that will lead to a lasting and fulfilling career.”