Senior DfE officials responsible for apprenticeships faced questions from MPs at the Public Accounts Committee in the House of Commons last week and were presented with a good a forensic examination of the reforms as we’ve seen from anyone.   A great deal of ground was covered including a thorough probing of quality issues and what the NAO representative there called a ‘blizzard’ of standards.

I want to focus on two areas of concern that the MPs raised.  The first was the plaintiff cry of ‘we don’t have any large employers (i.e. levy payers) in our constituencies’.  This is a common refrain that gets fed back to AELP from our 800 members and explains why we have pressed so hard for there to be a minimum budget allocated each year for non-levy paying employers often referred to as SMEs.  No one knows including the government how much money is going to be left in the levy pot to fund the non-levy payers and yet, as the MPs pointed out, they will be the only source of apprenticeship opportunities for young people in many areas of the country because few of the levy payers (2% of all employers) are based in the majority of communities.  In the ministerial announcements expected before the end of this month, we really must have some assurance that a minimum budget at least at current levels of investment will be available for non-levy payers, even if that means DfE ministers having to go to the Treasury to get this underwritten.  For such an important policy, reassurances of ‘don’t worry, it should be alright’ are not enough.  Resolving this properly is essential for the social justice agenda being championed under Theresa May.

The second concern of the MPs relates to apprenticeship provision for different business sectors in a way that gets to the heart of the reforms originally proposed by Doug Richard in 2012.  Citing retail as an example of a popular sector, the MPs wanted to know whether high tech or STEM manufacturing and digital sectors would receive as much support as the current most popular sectors.  The DfE Permanent Secretary, Jonathan Slater, replied more than once that we would be moving away from a provider controlled to an employer driven system which will mean that the STEM sectors would be better served.

The government’s response raises some important issues.  Firstly independent training providers have always operated on a funding system based on evidenced employer demand where providers are only paid on delivery.  The notion therefore of employers being forced to accept apprenticeships that they don’t want or need when providers want to build a long term customer relationship doesn’t bear any relation to reality on the ground.  Furthermore the idea that the levy will make the programme more ‘pure’ in terms of employer demand for apprenticeships is a little difficult to justify when providers regularly hear stories of company finance directors instructing HR managers to just get their levy money back somehow.   We are hardly in ‘nudge’ territory here that policymakers seem so fond of these days.

The logic of a more employer driven system suggests that in an economy 80% dominated by the service sectors, at least 80% of apprenticeships might be found in those sectors.  AELP believes in an all sector apprenticeship programme but as the MPs noted, this won’t necessarily sit comfortably with the proposals being considered for the new government’s industrial strategy.  The Permanent Secretary said that armed with real time data from the DAS, the answer to favouring certain sectors could be for the government to make future adjustments to the sector funding rates which will shortly be announced.

Again in the context of Brexit and possible controls on migratory workers in the service sectors such as hospitality, this prompts a further debate.  But I will just come back to what Sir Martin Donnelly, the former BIS Permanent Secretary, said to the PAC members at the end of the session.   Sir Martin observed that he had been working on the apprenticeship reforms for six years and that we now needed a period of stability for 5 to 10 years to evaluate how the reforms are working.  AELP couldn’t agree more because nothing could make employers more disaffected than regular tinkering with either the funding rate or the co-investment ratio.

AELP members contact me with fresh issues every week as they work through planning strategies with their employer customers and we share these with officials to try and ensure that they are resolved before next April’s equivalent of the Big Bang.  Therefore after next week’s announcements, the policymakers must take some well-earned holiday and leave the sector with a period of stability.      


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

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