In the summer budget the Chancellor made two very significant announcements. The first was the introduction of a levy on large businesses to help fund apprenticeship growth. For me, this solves the mystery of how the government is going to pay for the increase in the number of apprenticeships from 2 million in the last parliament to 3 million in this new one.
The idea being that revenue from the levy will help fund all post-16 apprenticeships in England. According to the documents, the levy will "provide funding that each employer can use to meet their individual needs". The funding will be directly controlled by employers via the digital apprenticeships voucher, and firms that are committed to training will be able to get back more than they put in.
This brings me to the second important announcement, which was the reassertion by the Chancellor that government will be introducing a voucher system to transfer influence over funding from provider to employers.
This concept was originally floated in April but it looks like this is now a much firmer policy in how the government intends to make the new employer ownership work. I see this as a clear signal that government is holding its nerve to follow through on the reform.
In the budget aftermath I think both employer and further education (FE) sector bodies are still digesting the announcements. However, the Confederation of British Industry, and the Association of Employment and Learning Providers are cautious until details emerge.
At Activate Learning we are also waiting to see more details on how this will work in practice. However what is clear is that businesses will get even more say in apprenticeship standards and costs.
Our position as an education provider is unusual. We are positive about these changes because we believe that standards will rise so providers like us need to smell the coffee and appreciate how apprenticeships add value to businesses.
As one of the UK's largest college groups, Activate Learning has put in place a professional training and apprenticeship arm (Activate Enterprise) designed to meet businesses' needs as they take more ownership of apprenticeship standards and funding. We combine integrity in our professional training standards and agility in tailoring our services for businesses.
These two announcements also come on the back of another statement made by the Chancellor earlier in the year that there would be a 20 per cent increase in the minimum wage for apprentices. This has created real interest from all parties in this form of training as a means of bridging the UK's skills gap.
However, in the last few months there have also been concerns that too much talk of apprenticeships as a means of tackling unemployment is damaging the brand.
As an apprenticeships partner of four further education colleges working with more than 1,500 apprentices, we have set out a clear four-point manifesto:
- Apprenticeships are professional qualifications - Apprenticeships prepare people for professional and technical careers. We should stop calling them 'vocational' because the term has a less clear meaning outside the education sector. We should also avoid referring to apprenticeships as 'the equivalent of GCSEs/A-levels/foundation degrees' because they should be seen as valuable in their own right.
- Employer ownership is good for the quality of apprenticeships - The Government should hold its nerve in implementing the new levy. This is the single greatest lever to improve the quality and relevance of apprenticeships. Employers are already playing a more informed and productive role in shaping the future and we should encourage this to raise standards of quality. Small businesses in particular need to know that the process will be simple and business-like. That means keeping the funding rules and the voucher scheme as slick and simple as possible. As providers we should not clutter the debate with our supply-side concerns about profitability; we should make the market work for clients' benefit.
- Apprentices should be rewarded for performance - Employers should link performance reviews to pay increases, recognising apprentices' contribution to the business, particularly if they have come in at the minimum rate.
- Apprentices' managers and mentors need more help - The real value of apprenticeships is unlocked by leadership and support in the workplace, alongside technical training. Employers should assess the skills of their managers and mentors, investing in their development to support apprentices and accelerate returns to the business.
The government's reforms will help to raise standards because employers, not government, are defining what is required. This might make it harder for us to be an effective training provider, so we have to step up our performance.
It might be uncomfortable, but it is for a good cause. In summary, I view the budget and other announcements about apprenticeships this year very positively. Apprentices, businesses and our economy will benefit in the long run.
Pablo Lloyd is chief executive of Activate Enterprise, part of Activate Learning