Scotland Plans 150,000 Apprenticeships. Parliament Has Reopened the Question of Where the Money Goes

The Scottish Government intends to fund at least 150,000 apprenticeships over the next five years. As it prepares for that expansion, an older argument over the way apprenticeship money moves between government, managing organisations and colleges has returned to Parliament. In one established plumbing scheme, 40 per cent of the public contribution is retained by the industry managing organisation and 60 per cent is paid to colleges. The organisation says the retained money pays for work that colleges do not perform. Scotland is now reviewing the funding system while responsibility for apprenticeships is being transferred to the Scottish Funding Council.

On 8 September, Scotland’s new education secretary appeared before the Scottish Parliament’s Education and Gaelic Committee to discuss a programme that will substantially expand work-based learning during the current parliamentary term. The government has committed to funding at least 150,000 apprenticeships, increasing Graduate Apprenticeship opportunities and introducing an Apprenticeship Accelerator Grant intended particularly to support smaller employers.

During the evidence session, the discussion returned to a less visible part of the system: what happens to the public contribution after an apprenticeship has been approved. MSP George Adam referred to evidence given during scrutiny of Scotland’s recent tertiary education reforms, when an industry managing organisation confirmed that it retained 40 per cent of the Skills Development Scotland contribution associated with apprenticeships it managed while paying 60 per cent to the colleges providing part of the training.

In May 2025, Stephanie Lowe of the Scottish and Northern Ireland Plumbing Employers’ Federation told a parliamentary committee how SNIPEF Training Services manages the Modern Apprenticeship in Plumbing and Heating. Asked directly what proportion of the public contribution was passed to colleges, she said 60 per cent. The remaining 40 per cent was retained by the managing organisation.

Lowe did not describe that 40 per cent as profit. She explained that the managing organisation undertook work throughout the apprenticeship: dealing with employers, apprentices and colleges; conducting quarterly reviews; providing regional training officers; supporting employers; mediating where difficulties arose; monitoring the qualification; and helping apprentices complete the programme. SNIPEF is a not-for-profit employers’ federation, and it later objected to portrayals of the retained contribution as simply a management fee.

That evidence places Scotland’s apprenticeship funding model somewhere more complicated than a choice between money being spent on training or being removed from it. The public contribution can pay for several functions before, during and around the formal teaching itself.

The apprentice does not receive the training contribution

Modern Apprenticeships are jobs. The apprentice is employed and paid by an employer while working towards an approved qualification. Public money does not normally arrive as a payment to the apprentice. Skills Development Scotland currently administers a government contribution towards training and assessment costs and pays the contracted learning provider.

The amount varies considerably. Current contribution rates depend upon the apprentice’s age, qualification level and occupational framework. Published rates range from hundreds of pounds to more than £10,000 over the training period. Skills Development Scotland’s programme specification divides payment between stages including commencement, milestones and completion rather than treating the contribution as an unrestricted lump sum.

About £90 million a year of public money is currently associated with the Skills Development Scotland contribution to Modern Apprenticeships. Wider apprenticeship expenditure also passes through the Scottish Funding Council and the Student Awards Agency Scotland because Foundation and Graduate Apprenticeships operate differently.

The system therefore contains several types of apprenticeship, multiple funding institutions, hundreds of providers and thousands of employers. The Scottish Government said in June that it was investing £198 million annually across approximately 25,500 new Modern Apprenticeships, 5,000 Foundation Apprenticeships and more than 1,500 new Graduate Apprenticeships, as well as supporting Modern Apprentices already in training.

Managing organisations occupy a particular place in the system

Some industries have developed organisations that sit between the public funder, employers, apprentices and the institution delivering formal training. Their purpose is particularly apparent in sectors dominated by small businesses. A microbusiness employing one apprentice may not have a human-resources department, training manager or administrative staff capable of managing a multi-year qualification, funding claims, assessments and regulatory requirements.

In the plumbing scheme described to Parliament, SNIPEF Training Services carries out that coordinating role. Lowe told MSPs that without the organisation’s work many employers would not take apprentices at all. The organisation deals with the college relationship while providing continuing industry oversight of the apprenticeship.

Parliament’s subsequent Stage 1 report recorded that Skills Development Scotland contracts with three lead providers of this kind: SNIPEF, the Scottish Electrical Charitable Training Trust and the Construction Industry Training Board. Together they were responsible for approximately 10 per cent of apprenticeship starts at the time of the evidence.

Skills Development Scotland told the committee that describing money retained by these organisations simply as a management fee would be inaccurate because it paid for activities required to deliver and support the apprenticeship.

The committee nevertheless identified a question about value for money. Its report recorded ministerial concern about cases in which a managing organisation subcontracts formal training to a college for less than half the value of the public contribution and the college then uses publicly funded credits to provide the teaching. The concern was that, in such circumstances, two different streams of public support could contribute to the same apprenticeship.

Scotland has already compared the system with England and Wales

The parliamentary inquiry also examined how intermediary costs are treated elsewhere in Britain. Its Stage 1 report stated that managing-agent retention was capped at 15 per cent in England and 10 per cent in Wales, where the agent also had to be a registered charity. Scotland’s arrangements were not structured around the same universal cap.

The comparison is not exact because apprenticeship systems differ between the three nations. Scotland funds apprenticeships through its own frameworks, institutions and contribution rates. Industry bodies also argue that the services being purchased cannot be reduced to administration alone.

The evidence nevertheless exposed something rarely visible in public discussion of apprenticeship numbers. When government announces money for apprenticeships, the route between the national budget and the person learning a trade can contain several organisations performing different parts of the job.

There is no reason in principle why that arrangement must be inefficient. Specialist industry organisations can possess relationships with employers and technical knowledge that a general educational institution does not. Equally, the existence of a useful intermediary does not establish what its work should cost. That requires information about expenditure, outcomes and the services delivered for each part of the public contribution.

The system is about to change hands

Scotland is already restructuring who controls apprenticeship funding. Legislation passed during the previous parliamentary session transfers responsibility for securing and funding national training programmes and apprenticeships from Skills Development Scotland to the Scottish Funding Council. The new powers are due to commence in April 2027.

The transfer places apprenticeship funding alongside the institution already responsible for funding Scotland’s colleges and universities. That creates the possibility of a more integrated tertiary system, but it also changes relationships with private and industry training providers that have developed under Skills Development Scotland.

During scrutiny of the legislation, trade unions and other witnesses warned that the Scottish Funding Council would require sufficient expertise and capacity to oversee a provider network much broader than colleges and universities. Evidence to Parliament indicated that independent training providers delivered the majority of Modern Apprenticeships, while colleges accounted for a substantially smaller share.

The government is separately reviewing Modern Apprenticeship contribution rates. The review began in 2026 and is examining a system whose rates evolved through earlier reforms dating back more than a decade. Its terms of reference include value for money and transparency as well as the differences between occupational frameworks.

Expansion changes the scale of the financial question

The commitment to at least 150,000 apprenticeships over the parliamentary term is not simply a continuation of the present system. It requires a sustained increase in opportunities while Scotland is simultaneously changing the institution responsible for funding them.

The demand for skilled workers is substantial. Skills Development Scotland estimates that Scotland will require around 1.3 million workers over the coming decade as older workers leave the labour market and major investment programmes create new demand. Construction, energy, engineering, care, digital industries and other sectors already report shortages in particular occupations.

Expanding apprenticeship numbers therefore involves more than finding additional applicants. Employers have to be willing to employ them. Training capacity has to exist. Qualified assessors and teaching staff are required. Small firms have to be able to absorb wage costs. Industry frameworks have to remain relevant as technology changes.

The financing system determines how much of the public contribution is available for each of those functions.

The plumbing example also demonstrates why a national percentage alone cannot answer the question. If the managing organisation disappeared and the 40 per cent were transferred directly to a college, somebody would still have to perform the employer liaison, reviews, monitoring and industry coordination described to Parliament. The relevant calculation is therefore not how much an intermediary retains, but how much each necessary function costs, whether it is being performed efficiently, and whether the same function is already being funded elsewhere.

That information is harder to obtain for private and industry organisations than for colleges. Parliamentary witnesses have previously pointed to differences in freedom-of-information requirements and public scrutiny. The forthcoming transfer to the Scottish Funding Council will place a larger and more varied provider system under an organisation whose own accountability arrangements were designed primarily around institutional funding.

Scotland has now committed itself to producing substantially more apprenticeships while reviewing their contribution rates, reorganising their national funding authority and reconsidering relationships between colleges and independent providers.

The number 150,000 will eventually be easy to count. The more difficult account will follow the money beneath it: what Scotland paid, which organisations received it, what each organisation did for its share, how many apprentices completed, and whether the resulting skills were the ones the economy needed.

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