From education to employment

How the levy has affected providers. Part 4

Tom Richmond, Senior Research Fellow at the Reform Think Tank

This is part 4 of a daily analysis of the Reform report on the Apprenticeship Levy that FE News are running this week.

Not only is it important to gain the support of employers for reforming apprenticeships, the colleges and private training providers who ultimately deliver the external training and assessments within an apprenticeship are also key stakeholders. The Government has put in place two ‘registers’ of organisations who they deem suitable to deliver this external training and the final assessment for apprentices at the end of their course. This article will discuss a whole host of problems already facing these two registers that threaten to reduce the quality of apprenticeships.

The Register of Training Providers

Employers must choose a training provider from a new register – the Register of Apprenticeship Training Providers (RoATP). The aim of the Register was to “open up the market and increase competition and thereby to drive up value for money and quality”.

The Government also noted that the Register “should have a strong focus on applicants’ capability to deliver high-quality apprenticeships, supported by applicants’ fitness and ability to receive public funding. Therefore, applicants to the RoATP would need to pass a range of tests in the areas of financial health, due diligence, quality, capacity and capability”.

There is nothing wrong in principle with allowing new entrants into a market. That said, a focus on high-quality provision should remain paramount. In March 2017 Amanda Spielman, who had recently been appointed as the new Chief Inspector at Ofsted, noted that “it is clear there are a lot of would be new entrants, a lot of people with very limited experience and potentially quite a lot of fragmentation”,which presents a considerable challenge to Ofsted as well as the ESFA. Since the application process for the Register was opened, several incidents have suggested that quality is not being sufficiently reinforced by the ESFA.

The initial task facing the ESFA was to invite applications from training providers who wished to join the Register in order to train apprentices in levy-paying employers, after which they accepted applications from training providers who wished to bid to deliver a share of a £650 million contract to work with non-levy paying employers. The final list of over 2,500 organisations that have made it onto the Register contains some questionable entries.

For example, there are over 100 organisations on the Register that have either not been trading for a sufficient length of time to provide a set of financial accounts to the ESFA or have been previously censured by the ESFA for poor performance. In addition, 32 per cent of the providers now able to deliver training to non-levy payers have been awarded their first ever apprenticeships contract, echoing Amanda Spielman’s concerns about the limited experience of many providers.

The first sign that new entrants to the market may potentially weaken the apprenticeships programme has come from Ofsted’s early monitoring visit of Key6 Group Limited, which was created in 2015 and accepted onto the Register in March 2017. This visit resulted in Ofsted declaring that the apprenticeships being provided “are not fit for purpose” and deliver “a poor standard of training”. Their report stated that the Key6 Group had begun “swiftly recruiting apprentices in a relatively short space of time” after being added onto the Register and that “the large majority of apprentices are not even aware that they are an apprentice, and identify themselves as studying a level five management course”. The apprentices told inspectors that they were “not learning anything new on their apprenticeship” and had been asked to “shoehorn existing work in a portfolio to get a free qualification”. The response from Key6 was to complain about the Ofsted report while citing the fact that they are “a young organisation which inevitably will go through continuous improvement.”

As this was only the first monitoring visit to a new entrant by Ofsted, it is too early to say how many other new providers will raise similar concerns. Meanwhile, the ESFA had already decided to introduce additional checks after the application process was completed. In March 2017, it announced that new providers would be required to attend mandatory training before any apprenticeship activity starts. In addition, an ESFA ‘snapshot’ of the new provider’s delivery three to six months into their training could potentially result in them being taken off the Register. In September last year, the ESFA also said that it would ‘review’ how the Register operates in light of the results of the application process. Even so, the volume of new market entrants presents a considerable challenge in terms of maintaining high-quality provision across hundreds of new apprenticeship standards.

Not only are many seemingly unsuitable organisations now on the Register and able to access millions of pounds in government funding, some high-profile providers with a strong track record in apprenticeships have been excluded. Exeter College – one of the most successful colleges in the country and rated ‘outstanding’ by Ofsted – was denied a contract for supporting non-levy paying employers, as was Newcastle and Stafford Colleges Group, which is rated ‘good’ by Ofsted and has an apprenticeship achievement rate of 84 per cent. At the time of writing, the recriminations from the application process are far from over as at least 50 complaints have been lodged with the ESFA in an attempt to overturn these decisions and others like them.

As noted in the previous chapter, being placed on the Register is merely the first step for providers. Their next task is to negotiate a price with employers for the external training they provide. In 2012 the Richard Review proposed that the price for apprenticeship training should be freed from government control, meaning that employers and providers would negotiate the cost of whatever training was delivered. The Review predicted that “a market-led price for the provision of apprenticeship training will lead to higher quality training, lower prices and, ultimately, better outcomes for the learner, employer and society.”

This vision was not supported by evidence at the time. As the Institute for Fiscal Studies have since pointed out, the exact opposite is a much more likely outcome under the levy:

…there will be little scope for providers to compete on price – the price of training has little effect on the cost to the employer. Thus there will be little incentive for providers to price below a given band’s maximum. […]we would expect to see a strong tendency for providers to price training courses at or close to the level of the relevant band maximum. This could be reinforced by the fear of training providers that pricing below the maximum would signal that a course is of lower quality. One related side effect of this likely bunching of providers at the band maxima is that it will make it difficult for employers to use price signals as a guide to quality.

Once a training provider – however inexperienced or unsuitable – gets onto the Register, their rational response is to push prices as high as possible to receive the maximum subsidy available for every apprentice from the government’s levy pot. The quality and relevance of the training provided is little more than a footnote in this scenario, contrary to what the Richard Review envisaged.

The decision not to assign fixed prices to each apprenticeship, which was essentially the system used before the apprenticeship levy, appears to have compounded the overall complexity of the levy. What’s more, in recent weeks the Government has announced that the entire 15-band funding structure is to be reviewed (before the levy even reached a full year of operation) and that they are reconsidering the whole concept of employerprovider negotiations, despite insisting on it for the last six years, as many employers have told them that “they do not feel able to negotiate with providers”

All apprenticeship standards and end-point assessments for apprentices should be assigned a fixed cost by the Education and Skills Funding Agency to remove the need for complicated price and contract negotiations between employers and both training and assessment providers.

The Register of Assessment Organisations

After choosing a training provider, employers must select an organisation from the Register of End-Point Assessment Organisations (RoEPAO) to deliver an ‘end-point assessment’ (EPA) for each apprentice at the end of their training. The training provider then contracts with the EPA provider on behalf of the employer to deliver the assessment. As with the register for training providers, the government guidance states that any organisation wishing to be included on this register of assessment organisations must meet a range of entry criteria that analysed their financial health, organisational capacity and capability and also their sector experience and knowledge. As of February 2018, there were 126 organisations listed on the RoEPAO.

The Register itself is overseen by the ESFA, which is purely a funding body and has no background or expertise in judging the capability and capacity of prospective assessment providers. The bottleneck created by putting the ESFA in charge of the Register meant that in the summer of 2017 at least 1,300 apprentices had started their training without an EPA in place, leaving them unable to complete their apprenticeship. In addition, one-third of all apprenticeship standards still had no assessment organisation listed against them while another third only had one.

Once on the Register, assessment organisations are free to offer EPAs for any of the apprenticeship standards that have been approved for delivery. Seeing as there are now over 250 approved standards, the scale of potential confusion and duplication becomes immediately apparent. As of March 2018, there are 19 different assessment organisations on the Register offering an EPA for the ‘Team Leader / Supervisor’ standard, 15 organisations offering an EPA for the ‘Retailer’ standard, 13 organisations offering an EPA for the ‘Retail Team Leader’ standard, 13 offering an EPA for ‘Customer Service Practitioner’ and 11 offering an EPA for ‘Hospitality Team Member’. This issue – which could conceivably get even worse if more assessment organisations decide to offer the same EPAs – poses significant risks to the quality of the apprenticeship programme.

The NAO had already stated in 2016 that the Government’s approach to assessing apprentices would inject a variety of risks into what is now the levy system: 

  • Employers might look to use assessors whose standards are lower than others
  • Assessors might look to win more work by lowering their assessment standards
  • Employers might collude with assessors to sign off apprentices without checking
  • Assessors might collude with employers to sign off apprentices without checking

Just months before the levy came into force, the NAO found that the “DfE has not yet established what information it will need to monitor key behavioural risks and spot signals that these risks may be maturing.” Several loopholes have since been identified and exploited. For example, it was reported in February 2017 that three sectors – retail, hospitality and leisure – had managed to find a way for employers to assess their own apprentices at the end of their training, which undermined the explicit requirement for every EPA to be independently judged.

The on-going quality assurance of the organisations accepted onto the Register is more troubling still. Once a group of employers has designed a new apprenticeship standard, they can choose from four different options to monitor the quality of the EPAs delivered by assessment organisations on the Register:

  1. the exam regulator Ofqual
  2. an ‘employer-led’ model
  3. a professional body
  4. the Institute for Apprenticeships (IfA)

Ofqual – the only one of the four options that can offer sufficient expertise in assessment validity and reliability – is responsible for formally regulating just 29 apprenticeship standards. The IfA, which only came into existence in April 2017 alongside the levy, was supposed to focus on supporting employers as they develop new apprenticeship standards and ‘assessment plans’ (which give a high-level overview of what an EPA should include). Nevertheless, the fledging IfA has been selected for the quality assurance of 98 apprenticeship standards despite being set up just a matter of months ago and having no track record or proficiency in regulating national assessments. This situation has been allowed to develop despite the IfA stating on numerous occasions that it should only be used ‘as a last resort’.

In total, there are now around 40 different bodies who are listed in assessment plans and want to offer quality assurance across the four options listed above. The IfA website claims that all four options must “[monitor] the performance of different [assessment organisations], the effectiveness of the apprenticeship standard and assessment plan; checking it is reliable, rigorous and fit-for-purpose” without any mention of how the validity and reliability of the real assessment tools being used to assess apprentices will be checked both now and in future. In such a system, there is no dependable way to prevent poor practice and inappropriate behaviour on the part of employers or assessment organisations when the responsibility for monitoring them – and the expertise required to do effectively – is spread so thinly.

Irrespective of how well the apprenticeship levy has been designed, if the supporting structures like this Register fail to deliver the necessary safeguards to protect against a ‘race to the bottom’ in service quality then taxpayers and apprentices are the ones most likely to lose out. Genuine high-quality EPAs are vital to the integrity and credibility of apprenticeships. So long as employers can pick and choose who monitors them and their assessment providers in delivering EPAs, it is hard to see how the apprenticeship system will be respected. The contrast between this incomplete approach to quality assurance for apprenticeships and the rigorous manner in which GCSEs and A-levels standards are protected nowadays could hardly be greater. The NAO was right to warn of the dangers inherent in pursuing the current model.

To counteract these problems, new measures need to be introduced to provide much greater assurance for apprentices and taxpayers:

  • Responsibility for administering the Register of End-Point Assessment Organisations should be moved from the ESFA to Ofqual
  • All the existing options for quality-assuring EPAs should be scrapped save for the option of an assessment provider registering with Ofqual
  • Ofqual should be formally given responsibility for judging the quality of the assessment plans put forward by groups of employers when developing the apprenticeship standards
  • Ofqual should require a complete set of sample assessment tools (e.g. written examinations, practical assessment sheets) before any new apprenticeship standard is cleared for delivery
  • Only one set of assessment tools should be allowed per apprenticeship standard, meaning that any assessment provider will use the same set of standardised tools for each EPA

Any additional resource required to deliver these measures should be drawn from the funds generated by the apprenticeship levy as they are required to ensure that these funds are spent appropriately.

The exam regulator Ofqual should be made the only option for quality assuring the end-point assessments for apprentices to ensure that standards are maintained over time and poor practice is quickly identified and eradicated.

Tom Richmond, Senior Research Fellow at the Reform Think Tank

About Reform: An independent, non-party, charitable think tank whose mission is to set out a better way to deliver public services and economic prosperity. 

Now that the apprenticeship levy has completed its first full year of operation, last Friday (13 Apr) Reform published “The Great Training Robbery: assessing the first year of the apprenticeship levy” which reviews the available evidence to determine whether the levy will, as the Government hopes, “incentivise more employers to provide quality apprenticeships” and “transform the lives of young people who secure them”.

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