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    Moves away from subcontracting need to be ‘carefully managed’

    Official data, obtained by AELP from the Education and Skills Funding Agency through a Freedom of Information request, has revealed for a second year how dependent the government is on independent training providers for the delivery of its flagship Apprenticeship programme.

    75% of the 509,000 apprenticeships started in 2015-16 were delivered by independent training providers (ITPS) in partnership with employers either under a direct contract with the Education and Skills Funding Agency (ESFA) or under a subcontract with a further education college or another provider.

    This is virtually unchanged from last year despite ministers wanting to see the now 20% college share of the market increase substantially.

    For every 20 apprenticeships, 15 are delivered by ITPs, 4 by colleges and 1 by other provider types.

    The Association of Employment and Learning Providers (AELP) recognises that these market shares might change as the levy reforms take effect and new entrants such as universities and employer providers take on more apprentices. Many of these new entrants, more FE colleges and the new End Point Assessment organisations are joining AELP and this strengthens the provider voice to secure apprenticeship reforms which work best for employers and apprentices. At the same time, a strong AELP can promote the case for a sustainable and diverse provider base that is needed to support employers of all sizes across all sectors.

    Carefully managed subcontracting

    The training for nearly 1 in 3 apprenticeships (29%) is contracted out by the lead ESFA contract holder to another provider as a subcontractor, nearly all of which are ITPs. 40% of college apprenticeships are subcontracted, 97% of which are delivered by ITPs.

    The government has previously made clear its desire that the level of subcontracting (29%) should be substantially reduced. The recent much smaller funding allocations for the apprenticeships of non-levy paying SME employers have been interpreted as a means of achieving this because lead contractors now have much less funding to pass on to subcontractors.

    AELP has urged the government to step back from attempting to manage the supply-side market, pointing out that under the apprenticeship reforms, it will be employers who decide which providers deliver the training and whether or not subcontracting is permissible.  If all employers including SMEs were to join levy payers on the new Apprenticeship Service system (TAS) from January 2018, then the determination of provider market share and the amount of subcontracting would be left entirely to employers, which is something AELP would strongly support.

    In the meantime the ESFA should be increasing provider allocations immediately from within its £440m non-levy budget to safeguard new SME apprenticeship starts in the period May-December 2017 and to prevent good quality subcontractors from going out of business.

    MarkDawe 100x100AELP CEO Mark Dawe said: ‘It’s no surprise that the 75% ITP share of the apprenticeship market is unchanged. Strong employer engagement of levy and non-levy payers allied with good quality provision and a flexible response to the customer’s needs are the key to success.

    ‘AELP supports the employer-driven principles behind the government’s apprenticeship reforms. With the information available including Ofsted judgements, employers are perfectly capable of choosing a training provider, college or another type of provider that will be responsive to their needs. Let them get on with it. AELP has excellent college members who are comfortable with this and they don’t need the government to try and fix the market for them.’

    ‘Too much subcontracting in the past has been about preserving the contract value allocated to the lead contractor rather than delivering best value of the taxpayer. The overall level should come down under the reforms although employers should decide what level is acceptable.’

    This data covers 16-18 and 19+ Apprenticeship starts by provider type for the year 2015-16. There were 509,400 apprenticeship starts. 26% of these were by 16-18 year olds and 74% were by adults aged 19+. The Agency has not made this provider-type breakdown data publicly available since 2011-12.

    The key findings for the year 2015-16 are:

    • 75% of all apprenticeship starts in 2015-16 were delivered by independent training providers (‘Private Sector Public Funded’), whether direct or subcontracted, compared with 76% in 2014-15. ITPs delivered 61% of 16-18 and 80% of all 19+ apprenticeship starts.
    • FE colleges delivered 1 in 5 (20%) of apprenticeship starts, again in line with 2014-15. 
    • The remaining 5% were delivered by local authorities, universities, sixth form and specialist colleges etc.
    • 29% (148,140) of apprenticeship starts were delivered by subcontractors, 92% of them by ITPs.

    Before stripping out subcontracted delivery, 60% (306,450) of starts were under lead contractors who were ITPs while 32% (160,590) were under lead contractors who were colleges – again no real change from last year.  But 40% of the delivery of these college starts were subcontracted, nearly all (97%) to ITPs. This explains why 75% of all starts were actually delivered by ITPs when you often hear ministers and others refer to colleges delivering a third of apprenticeships instead of the actual 1 in 5. 

    About AELP: The Association of Employment and Learning Providers (AELP) nationally represents the interests of 800 organisations delivering vocational learning and employability support. Our training provider members deliver the majority of Apprenticeships, Traineeships and programmes for the unemployed. AELP Full Membership is for all independent training providers, employer providers, universities, local authorities, FE colleges and schools engaged in skills and employment.

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