Young people need SMEs to offer them apprenticeships

This week I presented my first AELP CEO monthly webinar which came a few days after the government had published its updated guidance for employers on the implementation of the apprenticeship levy.  What was striking was the number of questions on the guidance which came in from AELP member training providers during the broadcast even though they had had some time to read what had been published.

Providers are very good at getting quickly on top of new government rules and funding changes and they can often handle them without burdening their employer customers with the technical details.  The flexibility and responsiveness of independent providers is renowned and is one reason why they regularly score so highly in employer satisfaction surveys.  So if the levy system is to be simple, as ministers want us to believe, questions about its implementation should in theory be minimal.

But no, the latest guidance has just prompted more inquiries from providers in respect of both levy paying employers and the SME employers who will not be paying the levy.  To be fair, BIS has promised more details about the system in June, October and December which should help to clarify key aspects.  However the clock is ticking towards the April 2017 start of the Digital Apprenticeship System (DAS) for levy payers and we should at least be thankful that non-levy payers will not be part of it until 2018 at the earliest.

For the levy payers, it is clear that a whole new mindset and set of behaviours are required by the employer and the provider.  The change from a funding rate for each type of apprenticeship to a cap on the government’s financial contribution will involve the employer and provider negotiating on the price and volume of apprenticeship delivery in a way not previously commonplace in the sector.  One concern for us is that the proposed monthly payment system of government contributions could actually result in perverse incentives; for example a desire to minimise costs may lead to the duration of an apprenticeship programme being unnecessarily drawn out. 

We have received several questions about incentives and how the payment for these will work.  The new guidance states that while there will be additional funding support for English and maths, where needed, and for apprentices with special needs, the only remaining incentive is for taking on an apprentice aged 16 to 18.  We will find out what these are in monetary terms in due course.  Incentive payments for programme completion will however become history.      

Throughout the reform process, AELP has consistently lobbied for SME employer engagement to remain at the core of the apprenticeship programme.  There could be a temptation on the part of policymakers to say that the large employers and the public sector employers will between them account for achieving the Prime Minister’s 3 million target of new starts by 2020 and that therefore the participation of smaller businesses does not matter much. 

But this ignores the interests of young people who have been informed by ministers that a choice between going to university or starting an apprenticeship will be available to them.  Many areas of the country will be almost entirely reliant on smaller businesses offering apprenticeship opportunities to young people and yet the latest guidance may make this more of a challenge than it is now.  For non-levy payers and in line with the original Richard review proposals, the government is requiring a cash contribution paid by the employer to the provider as a condition for making its own contribution; yet feedback from providers and employers has always pointed to this acting as a major disincentive to programme engagement.   The requirement places vital apprenticeship training in the same category as most other business services with an invoicing trail and the potential chasing of late payments.  If the employer does not pay, the young person’s apprenticeship may stop mid-programme.     

AELP is hearing that instead of the early £2 for every £1 proposal, the government is now considering a proportionately larger contribution on its part to help keep SMEs in the programme.   When only 6% of school leavers are choosing an apprenticeship, it is essential that a proper and long-term incentive is in place to have smaller employers ready to offer them more opportunities.

Mark Dawe is chief executive of the Association of Employment and Learning Providers (www.aelp.org.uk)