Funding reforms ‘will result in fewer EY apprentices’

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Sector leaders are urging the Department for Education (DfE) to delay finalising its proposed funding reforms for early years apprenticeships in favour of a more ‘joined-up’ approach.


Tricia Wellings with one of her apprentices

Sector leaders are urging the Department for Education (DfE) to delay finalising its proposed funding reforms for early years apprenticeships in favour of a more ‘joined-up’ approach.

The proposals risk harming recruitment and even investment in young people because the rates are too low, it has been claimed.

The National Day Nurseries Association and the Pre-school Learning Alliance said that a priority should be wider agreement on the as yet unpublished workforce strategy.

With the move towards standards, the deadlock on adding a functional skills alternative to the GCSE requirement also needs to be resolved, they said.

Ross Midgley of PBD Early Years Training said that as drafted, the nationwide review is ‘pregnant with unintended consequences’ that risk counteracting its intended benefits. Predicted funding cuts of up to 60 per cent have prompted him to warn of having to pass on the large shortfall to settings, or cut corners on quality.

There is a notable gulf between what the Trailblazers group calculated would be the cost of training a childcare apprentice – £8,000 – and the £2,500 funding cap suggested by the DfE for Level 3 in the consultation papers (£2,000 for Level 2).

The sector plea comes as employers and training providers await October’s announcement on the final funding plans for apprenticeships, following a three-week consultation which took place during the summer.

The review comes amid unprecedented change and turbulence for the sector, in the context of an absent workforce strategy, the launch of both the early years national funding formula in April and the free entitlement extension to 30 hours, and the new national living wage and pensions requirements.


NDNA’s chief executive Purnima Tanuku called for apprenticeships minister Robert Halfon to ensure a ‘joined-up’ approach to tackling the recruitment and retention crisis in the early years sector.

‘We have seen evidence that the [apprenticeship] levy could severely limit the uptake of apprenticeships still further when the system is already under huge pressure,’ said Ms Tanuku.

‘Faced with the roll-out of the 30-hour entitlement next year, now is the time when the PVI nursery sector should be recruiting to meet demand.

‘We would urge the DfE to at least hold off on these proposals until an effective workforce strategy and resolution to the stringent GCSE requirements for Level 3 staff have been delivered.’

In its consultation response, the NDNA wrote that ‘the band setting at £2,500 is inadequate’. It added, ‘In the early years sector, under-17s cannot be used in statutory staff:child ratios, so are already an extra cost for employers and any additional costs could discourage investment in young people.’

Alison Simpson, an operations director at Lifetime Training, described the disparity between standard and framework caps across sectors as ‘startling’.

She added that there ‘needs to be much more rational thinking applied to the funding of frameworks’.

Ms Simpson said she believed that ‘any kind of cash contribution’ required from small to medium-sized businesses, including in the early years sector, would hit apprenticeship numbers badly.

She predicted employers with a long history of taking on apprentices would start ‘scaling back their programmes or, worse, withdrawing altogether’.

Large employers with a culture of apprenticeship training will also be ‘formulating plans to reduce their intake’ to avoid costs outside the levy, she said.

The Pre-school Learning Alliance said the funding limit ‘makes the delivery of any apprenticeship programme very challenging for training providers’.

Michael Freeston, director of quality improvement at the Alliance, said, ‘There is a risk that providers will be forced out of the market, and training provision will decline as a result.

‘Similarly, the proposal that employers will have to negotiate fees with training providers could lead to a “race to the bottom”, and see the quality of training decline.

‘This is all set against a background where the sector is still awaiting the long-promised workforce strategy.

‘At present, employers and training providers are unsure of the qualifications and professional development requirements which the new apprenticeships will slot into.

‘We would urge the Government to address this by publishing the workforce strategy proposals as soon as possible.’

PBD’s Mr Midgley said the sector should not be fooled by DfE PR which made the proposals sound like an ‘absolutely fantastic deal for all concerned’.

Illustrating the likely impact of the reforms on training providers, Mr Midgley said the Level 2 Children and Young People’s Workforce framework rate is currently £4,370, plus another £345 for functional skills – ICT (information and communications technology). At present, for an apprentice aged between 16 and 18 in a deprived area, this would generate an uplift to £7,426. In contrast, the proposed £3,000 (made up of the £2,000 cap for this framework plus the £1,000 top-up), amounts to a 60 per cent drop because the same supplements, including for deprivation, will not be available.

We approached the DfE for a comment.


  • To put in place 15 funding bands (across the spectrum of industry), with the upper limit of these bands ranging from £1,500 to £27,000.
  • All existing frameworks and standards are to be placed within one of these bands, with the new system in place from May 2017.
  • It will be up to employers to negotiate prices with providers, within these funding limits.
  • From May 2017, small employers (those with a payroll bill of below £3m – around 80 per cent of the early years sector) will be funded under the new regime.
  • The upper limit caps what the Government will co-invest.
  • The proposals, which result from the Skills Funding Agency seeking ‘simplification’, remove many of the existing variables from the system, such as weighting for area deprivation.
  • The banding does not specifically recognise the different cost pressures of providing training acrossage groups.
  • Funding of £471 per qualification will be available if an apprentice needs additional training to meet Level 2 in English and maths.
  • Training providers can claim for additional costs of training someone with a learning or physical disability, and this will not come from the employer.
  • In general, smaller employers will pay 10 per cent towards the training, based on the negotiated amount, which must bewithin the cap.
  • The Government will waive the ‘co-investment requirement’ for childcare businesses with under 50 employees that take on 16- to 18-year-old trainees.
  • Also on offer is a £1,000 top-up each for training companies and employers of this age group, along with a 90 per cent subsidy paid to trainers.
  • Where the apprentice is a 19- to 24-year-old care leaver or has a Local Authority Education, Health and Care plan, there is also a Government pledge to cover 100 per cent of the employer’s training costs.
  • The current Apprenticeship Grant for Employers, for those who take on new apprentices aged between 16 and 24, will continue until the end of the 2016/17 academic year.
  • Large employers (with a payroll bill of over £3m), will pay a monthly apprenticeship levy which will be a percentage of their payroll bill.
  • Levy-paying employers can use funds in their digital account which will also includea10 per cent government top-up.
  • The upper limit will cap the maximum amount of funds a levy-paying employer can use towards each apprenticeship.
  • Once that is spent and if they want to employ more apprenticeships, Government will co-invest based on similar rules as for small employers.
  • Funds will expire 18 months after they appear in the employer’s digital account, unless they are spent on apprenticeship training.
  • Non levy-paying employers will not be required to use the digital system until May 2018.


Bright Kids Group, which has three settings, offers one or two apprenticeships at each.

‘We have five apprentices at present,’ says CEO Tricia Wellings. ‘Essentially these are free for us – we sign them up with a training provider and then between us we train and assess.

‘From what I have read (and as an employer of more than 50 staff), from next year this could cost us anything from £250 (10 per cent of the top rate of £2,500 for EYE) to £1,000 (as cited by CACHE on its website).’

Ms Wellings also observes that only Level 3 ‘counts’ in the ratios, adding that ‘no further progression routes’ are enabled. She says this is a disappointing state of affairs, ‘and one we hope the workforce strategy will resolve’.

She continues, ‘With our ever-increasing costs (NLW, NMW) and still hugely unfair funding being proposed, this is one more thing that will cause sustainability issues within the sector. We are already hearing of dozens of settings closing across the country because of underfunding, and the requirement to pay more for apprentices can only exacerbate this situation.

‘Personally I think while it will always be desirable to have apprentices to “grow from within”, with these additional charges coming in we will have to review our future ability to take more than one or two at a time.’

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