COVID-19 and its impact on the apprenticeship sector – navigating the sector out of the crisis

United Kingdom

The apprenticeship sector is one that has seen significant changes over the past 20 years. From the “new deal” for young people introduced by the first Blair administration in 1997, to the reforms implemented by the Conservative/Liberal Democrat coalition between 2010 – 2015, apprenticeships have increasingly been lauded as a genuine and effective viable alternative to “traditional” educational options to those leaving school at 16.

Today, some of the world’s largest businesses across numerous industries have invested significantly in establishing apprenticeships that have given young people opportunities that they may not have had otherwise. Apprenticeships have led to a revolution and diversification in skills and career opportunities with an increasing number of minorities successfully completing apprenticeships.

In 2020, we have seen a global pandemic on a scale not seen since the early 20th century, wreak havoc upon the world. The true human and economic impact of COVID-19 may never be accurately calculated. The pandemic has had a pronounced impact on the apprenticeship sector with many employers struggling to remain financially viable with resulting redundancies being the result and by extension, independent providers of “off the job” training are also facing significant pressures both financially and practically.

In order to limited negative impact on the sector, breaks in learning of up to 3 months can now be implemented by the provider (previously only the apprentice could implement a such a break). The Government has also identified several potential funding options that some training providers may be eligible to access, although it is likely that a significant number of training providers will not be eligible and will face the real possibility of insolvency.

In April 2016, the Education and Skills Funding Agency (ESFA) suspended new applications for registered training providers. This was due to the then developing COVID-19 crisis and the lack of capacity to process and assess applications fully. It is not clear when ESFA will re-open their applications but there is a likelihood that the rules surrounding registration will change in order to streamline the application process for incoming training providers.

The financial ramifications on providers resulting from the pandemic may also result in training providers looking to sell their corporate entity or to work in collaboration with other organisations. There are numerous regulatory requirements that training providers must satisfy, and it is therefore vital that those looking to acquire an existing provider carry out extensive due diligence on the organisation before committing to purchase.

CMS has a team of specialist regulatory lawyers who are experts in this area. We can work with you to ensure that your business objectives are in accord with your regulatory obligations.