A government levy introduced to boost apprenticeship participation in England is costing Scottish colleges hundreds of thousands of pounds a year – with most of them getting nothing in return for their investment.
The apprenticeship levy was introduced by the Westminster government in April last year to encourage employers to take on apprentices. And while this was seen as an opportunity for colleges, which would be able to offer apprenticeship training, as large employers, FE institutions also have to pay the levy.
In a survey of colleges by Tes Scotland, the 14 Scottish colleges that responded and were large enough to pay the levy – meaning they have a payroll of over £3 million – paid £1,306,291 in 2017-18 alone, with many expecting to pay more in 2018-19.
City of Glasgow College paid £163,000 in 2017-18 and is estimating it will pay £170,000 for 2018-19, while Edinburgh College had to pay £159,000 in levy last year and will pay £161,000 next year. West College Scotland paid £141,000 in 2017-18 – an amount due to rise to £145,000 next year.
While employers in England are able to access training to the value of their levy contribution, Scotland receives a portion of the money raised by the levy through the Barnett Formula. The Scottish government has set up the Flexible Workforce Development Fund (FWDF), which in its pilot year offered levy-paying employers access to workforce training worth £10,000, and next year that will be increased to £15,000.
But the Tes Scotland survey reveals that only five colleges have accessed funding from the FWDF. It seems that some colleges were reluctant to take up funding that could be used by other local employers to buy training from their institution.
West College Scotland says it had “made the decision not to access the FWDF in the first year so that we could determine demand first”. A spokesman says: “In other words, although colleges are eligible for the fund, we did not want to be in a position where we might be displacing the training needs of other companies or organisations, having to tell them we didn’t have capacity.”
And even among the colleges that have accessed funding, one says it only did so after it became clear that local employers were not accessing the fund in large enough numbers for it to reach capacity.
Fife College says it accessed 2017-18 funding for training coming up in September, while Ayrshire College has accessed training which has focused on digital skills development, says a college spokeswoman. But she stresses that “the college’s access to the fund has not disadvantaged any external organisation and all requested training has been accommodated”.
Forth Valley College and West Lothian College also both accessed FWDF money, while Edinburgh College says that in September it will access training to offer an ILM level 3 award in coaching to staff within supervisory or managerial roles.
None of the colleges within the University of the Highlands and Islands partnership accessed training under the FWDF in 2017-18. Not all colleges pay the levy, of course, with West Highland College UHI among those too small to be made to do so.
Last month, an independent report about the first six months of the FWDF pilot concluded that it had taken “longer than expected to raise awareness of the FWDF and generate interest in demand” – and there was also likely to be serious underspend on the allocated £10 million.
According to the report, which was commissioned by the Scottish government and carried out by economic and social research consultancy EKOS, 508 employers were awarded funding from the FWDF between October 2017 and March 2018. Altogether, 1,041 awards were made in the six months covered by the report. It states that “part of the thinking for the £10,000 funding cap was that it was anticipated that the fund might be oversubscribed in the first year – this has, however, not materialised”.
The report also highlights that the way in which colleges have benefited from the fund has varied significantly. For example, Fife College alone engaged 59 employers in six months.
Colleges Scotland chief executive Shona Struthers says that the college sector has welcomed the opportunity to exclusively administer and deliver FWDF, adding: “During the first year, the focus has naturally been on ensuring that colleges build on existing relationships with employers and create new partnerships to ensure that eligible businesses can access the training opportunities that the fund provides.”
She adds: “A number of colleges, as levy-paying businesses, have not yet accessed the fund themselves. However, we would expect that more colleges will consider doing so in this coming year now that the FWDF has been firmly established and has been enhanced with greater flexibility.”
A Scottish government spokesman says the apprenticeship levy is “an unwelcome additional tax on Scottish employers, introduced without consultation by the UK government”. He adds: “Within the Scottish budget, the levy largely replaces previous skills and training funding, which means that essentially the UK government has passed the costs of training directly to employers.
“The Scottish government has continued to prioritise investment in employability, skills, training and workforce development and we continue to expand our foundation, modern and graduate apprenticeship opportunities. This is in line with the needs expressed by Scottish employers during our levy consultation in the summer of 2016.”