There are a number of urgent and important questions to ask about how the apprenticeship reforms are working. How are they working for employers who want to train staff, for apprentices who want to embark on their careers and employers trying to improve productivity? And how are they working for the government in its drive for better social mobility and in hitting its three million starts target?
It’s absolutely right that these sorts of questions are being debated because the introduction of the levy and the raft of fundamental reforms are complex. Making it all work requires all of the players – government, employers, apprentices, unions, colleges, providers – to work together and navigate through to an effective new system.
There is, though, an enormous gap in the debate, with too little time spent asking about how the changes are being experienced by the organisations contracted to deliver the training, support and outcomes. The absence of debate about the "provider market", the suppliers, including colleges will increasingly undermine the success of the changes.
Why is that gap a problem?
There are, arguably, five key aims for the apprenticeship programme: quantity (three million starts), quality, progression (aka social mobility), growth in science, technology, engineering and maths (Stem) skills and productivity. To achieve all of them requires a number of things which have nothing to do with the market of suppliers of course, but for all four aims, an effective supply-side strategy is critical. It’s even more critical when you consider the other reforms happening alongside apprenticeships. The introduction of T levels – which complement apprenticeships – using the same standards and the desire to kickstart learning at levels 4 and 5 make it even more obvious that a long-term and joined-up approach to the suppliers is needed.
Here’s why colleges are ideally placed to be able to deliver on those five aims. But our survey of colleges has found five problems that they are encountering now which need to be addressed urgently. The drop in starts in the first few quarters is an obvious problem, with colleges wanting to keep their expert staff on despite severe drops in income and enormous uncertainty about when numbers might bounce back. This is compounded by changes in which apprenticeships (levels and sectors) are going to be most in demand. The second problem is that colleges have an insufficient allocation in their SME contracts to meet demand, particularly given the traditional spike in starts expected again this autumn. Third, there has been an increase in the costs of administration, with contract negotiations with levy employers and new systems taking time to settle in. Fourth, the money is not moving quickly enough through the system to colleges. Payments are taking as much as 3 months to come through, causing cashflow challenges. Fifth, the prices for new standards and employer negotiations have led to very low margins in many cases, particularly in the SME market where employers often have only one apprentice or a few.
Put together, these problems bring into question how viable the programme is for colleges and how much investment they are confident enough to make for the medium- and long-term. That in turn potentially undermines the quality agenda.
Four key steps need urgent consideration
- There needs to be more clarity about the level of investment which will be made available for non-levy delivery to reassure colleges that they can plan to recruit to their maximum for an August-October start. That confidence is vital as soon as possible to prevent a cautious approach from colleges.
- The government needs to agree a long-term and stable solution for non-levy employers which balances the desire for employers to be in the lead with enough stability for colleges to be able to plan their offer, make viable the off-the-job-training and secure the facilities and expert staff which lead to quality.
- For trusted providers, the government should offer profile payments to help with cash flow. Colleges are trusted in other funding streams to return money not earned – and this helps them cope with the very low margins they operate under.
- The government needs to offer capital and equipment funding to colleges to be able to develop and maintain the facilities for the off-the-job training, which good-quality apprenticeships and T levels need.
But more than anything else, I would urge the government to seriously consider operating and developing a more overtly mixed economy of suppliers. Independent training providers have an important part to play in the market, but we have seen what too much reliance on the private sector can result in with Carillion and LearnDirect. The risks to programme quality and delivery is too great. A mixed economy, with contracts for the private sector and a different regime for colleges would provide the best approach to meeting the five aims outlined above.
An investment approach to colleges as community assets, as anchor organisations in the skills arena would have multiple benefits. Colleges would be able to continue to plan a comprehensive offer to employers and students, ensuring that all employers and people wanting and needing education and skills would be catered for. T levels would be tied in with apprenticeships, progression pathways from L3 to 4 to 5 and beyond would be clearly set out, employers would benefit from long-term relationships with colleges and efficiencies would flow. Not a dream or a distant land, but an achievable reality if the government truly wants to address the longstanding skills and mobility issues in our society and labour markets.
David Hughes is chief executive of the Association of Colleges