First, a bit of background.
A new government apprenticeship regime started in April 2017, funded mainly through an apprenticeship levy. The idea is to make apprenticeship training available to unqualified new or existing employees. The government has a new vision for 2020 and wants to see an increase in the quality and quantity of apprenticeships delivered throughout the country.
All employers with a pay bill of over £3m need to contribute to this apprenticeship levy, which will support the funding of apprenticeships within large companies and smaller non-levy-paying businesses.
Most advice firms will not have to contribute to the levy, but they can gain access to apprenticeship funding through something called 'co-investment'. This allows smaller firms to choose the most appropriate training they would like for their apprentices, which then needs to be delivered through an approved training provider. Employers can also use co-investment to select an assessment organisation.
Through co-investment, the government requires non-levy paying employers to make a 10 per cent contribution towards the cost of apprenticeship training. The government will then pay the remaining 90 per cent, up to the maximum amount of government funding available for that particular apprenticeship. There are also some financial incentives for apprentices who are aged between 16 and 18 at outset.
For over two years now, we have been closely following the development of the new government apprenticeships initiative. In 2016, we applied to be added to the Register of Apprenticeship Training Providers, which was approved in March 2017.
Although this was a positive step, it only allowed apprenticeship training to be provided to employers who pay the apprenticeship levy. As most advice firms are non-levy-paying, they can only gain access to apprenticeships through an approved training provider that has been allocated funding from the government’s Education and Skills Funding Agency (ESFA).
In December, we received word from the ESFA that we'd been successful in our application for funding to train apprentices for non-levy-paying employers. This was a huge accolade, and we are the only specialist training provider in the financial advice sector to have been successful in this funding tender.
Following this work, the New Model Business Academy launched its apprenticeship programme in February to help bring new advisers into our sector. We believe this is a significant development for the advice market, and we are proud to be able to offer this entry route to help replenish the profession with the next generation of advisers.
Although we're delighted to have received ESFA funding, the amount awarded is around half of what was expected. Funding has to be allocated regionally and according to the age of the apprentice. This means that initially, we haven't been able to offer as many places as we first hoped, given that the set-up costs for the apprenticeship programme will be higher than expected in the first year.
The first cohort of 13 apprentices started on 1 April this year, with a further 26 apprentices who started on 1 July. There will be then further intakes on a quarterly basis with an aim of bringing through around 100 apprentices each year into advice.
We continue to receive a high volume of enquiries and applications for the programme, but there is also a high level of interest in paraplanning apprenticeships. Although we don’t currently offer these, we are looking into options to see if we can launch a similar programme in paraplanning later this year.
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