The Welsh Government is under huge pressure to safeguard apprenticeship funding following deep cuts announced in this week’s draft budget which could result in around 10,000 fewer apprentices.

Employers’ representatives, including the FSB and CBI, have signed an open letter to First Minister Mark Drakeford outlining their deep concerns about the proposed 24.2% cuts – the equivalent of £35 million – to apprenticeships for 2024-’25.

They want to know why all the money they pay to the apprenticeship levy is not being invested in apprentices, with claims that more than £80m is being spent elsewhere.

The proposed cuts are a combination of a 3.65% reduction in the apprenticeship budget and the loss of previous European Union funding, which pre-dated the apprenticeship levy. Employers pay 0.5% of their total annual pay bill to the levy.

The cuts are on top of £17.5m recently slashed from apprenticeships by the Welsh Government.

The National Federation for Wales (NTFW), who represent training providers, are joining employers in calling for an urgent review by the Welsh Government before irreversible damage is done to its flagship apprenticeship programme.

They want to know:

Are employers getting value for money from paying the apprenticeship levy, estimated to be worth £190m a year to the Welsh Government?
What has happened to Economy Minister Vaughan Gethin’s pledge, in March this year, of an extra£36m to cover the loss of European funding for apprenticeships?

Detailed research undertaken by work-based training providers, who deliver apprenticeships in Wales, has revealed that levy paying employers are being short-changed by more than £80m a year.

The NTFW warns that the cuts threaten hundreds of jobs in the work-based learning sector. They want the Welsh Government to provide the necessary transition funding – replacing the money lost from the European Union following Brexit – to benefit learners, skills development, productivity and business growth in Wales.

“Despite contrasting messages from the Welsh Government, demand for apprenticeships remains strong from learners and employers, and we urge Welsh Government to reconsider the proposed cuts which could have catastrophic consequences for Wales,” said Lisa Mytton, the NTFW’s strategic director.

“Notwithstanding the value for money questions surrounding the levy payments, there is also growing concern that the cuts will impact the sectors most in need of a skilled workforce, including health and social care.

“The network has been told that the budget for degree apprenticeships will be increased. Yet the data shows that degree apprenticeships recruit fewer learners from disadvantaged areas compared to real apprenticeships.

“Yet again, those most disengaged and disadvantaged in our society will be hit by the huge cuts.

“Some are questioning how the minister prioritised skills and young people in his recent economic mission statement whilst preparing to slash the apprenticeship budget. Like all NTFW members, employers consider his statement to contradict the reality of the situation and want to know what his new priorities are.

“Skills and further education are fundamental to our economic recovery. The time to invest in our learners and workers is now.”