Playing roulette with funding for apprenticeships could cost the nation dear

 
Fri 25 Apr 2014

Everyone agrees that apprenticeships are a good thing, and everyone knows that to provide them costs money.  The question is who should be paying the lion’s share and how?

Let us be clear, apprenticeships work.  Since the government came to power the private sector has created 1.4 million new jobs – a staggering figure when compared to everywhere else in the EU and US, our biggest markets and competitors – and apprenticeships have made a significant contribution to that increased employment.  Traditionally, apprenticeships are organised jointly through the training provider (Milton Keynes College being such a one) and the employer, getting together to sort out what the learner needs to learn.  Payment has come from government to the College.  Government wishes to change this system and has begun a technical consultation.  The word is well chosen.  Those consulted are not being asked whether such a change is positive or workable but to consider the highly technical point of the mechanism by which the employer will now pay. The previous Richard’s Review of Apprenticeship provision has created a consensus that it is the employer who needs to drive the apprenticeship car.

The object of the exercise is twofold; firstly, the government is ideologically committed to the principle that where the public sector can be safely and sensibly shrunk the private sector will move in to fill the gap, will do things more efficiently and save the taxpayer money.  Secondly, by changing the funding mechanism ministers believe employers will be more directly involved in shaping apprenticeships, keeping them up-to-date and producing more useful workers to the benefit of everyone.  The Skills Minister, Matthew Hancock, produced The Future of Apprenticeships in England: Implementation Plan in October last year outlining the government’s intentions.  In the Executive Summary he wrote that, “the funding reforms on which we have recently consulted, will drive up quality.”  It is an attractive idea, that by making employers more central to the process they will also be driven to be more closely involved in shaping course content.  Some in the sector are sceptical.  Writing in The Guardian, Peter Stone from FE website Apprenticeships Life says, “The funding reforms will fail. Many of us in the industry believe that the new funding system will fall flat on its face. Some 90% of the companies out there are small businesses that are already struggling to make sense of the apprenticeships system and do not understand the enrolment process.”

This is at the heart of the matter.  The new system will possibly save on government spending because the bureaucracy involved, the paperwork and organisation, will have to be carried out by employers.  For large organisations with Human Resources department it will be relatively straightforward, but what of those smaller businesses Stone cites which do not have the time, the confidence or the expertise to fill in the forms, sign up to the websites and get to grips with the rigmarole involved, especially if they are only thinking of taking on maybe one single apprentice?

Then there is the issue of accountability when public money is spent.  Milton Keynes College as a public institution has to account for every penny which comes in and out of its coffers and there is a rigorous and clearly defined audit trail which ensures it all ends up where it ought.  We are aware of some businesses which are alarmed at the prospect of being responsible for public funds.  Will all who take on apprentices be subject to a similar audit regime to make sure no money ends up in the wrong bank accounts?

There is also a rather confusing and potentially worrying line in the consultation regarding how apprenticeship costs, the amount the business owner pays to the training provider, will be established.  It says that it aims “to give employers an incentive to negotiate on price (with providers) and drive up quality, but not so high that it is unaffordable for smaller employers.”  In our experience when employers negotiate on price it is understandably to minimise cost rather than boost quality.  If government is to contribute towards apprenticeships on a percentage basis, it suits the Treasury’s purposes if employers haggle hard with FE colleges and the like. 
Without doubt there are many in the private sector who are as committed to the principles of good training.  What is in question is whether the new regime will be asking more of them then can be reasonably expected in terms of planning, delivery and payment.

Strong apprenticeship programmes have been at the heart of the national economic successes of countries like Denmark and Germany.  In Britain, government, business and training providers have been working very hard to restore what was the poor reputation of apprenticeships here and with some measurable success, and there is no doubt these latest reforms are intended to continue that improvement.  The need to elevate the status of apprenticeships is widely recognised and a high quality programme teaching the skills which industry needs is fundamental to our economic future and it could just be that shaving a few pennies and shifting administrative responsibilities could set that progress back.

The consultation closes on 1st May and those with an interest can have their say at https://www.gov.uk/government/consultations/apprenticeship-funding-reform-in-england-payment-mechanisms-and-funding-principles

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