FE sector responds to Autumn Statement

George Osborne delivered the government’s Autumn Statement today as he stressed its austerity plan was working even though the job of recovery was “not yet done”.

Measures targeting the FE sector include funding for an additional 20,000 higher apprenticeships over the next two years and excluding traineeships from the DWP’s 16-hour rule, which had limited the provision that Job Seeker’s Allowance claimants could do in a week.

Below is a selection of thoughts by leaders in the FE sector on the plans:

Martin Doel, chief executive of the Association of Colleges (AoC), said: “We note the intention to fund apprenticeships through the tax system and have concerns regarding the practicability of this proposal, especially in relation to small and medium enterprises (SMEs). Careful and considered implementation will be required to ensure that the momentum that has been generated in growing high-quality apprenticeships is not undermined and we are therefore pleased that Government intends to consult on the technical aspects of the proposal.

“We are, however, very pleased to see the intention to grow significantly numbers of Higher Apprenticeships. Such apprenticeships delivered with college support offer the prospect of higher level skills that are relevant to employers and enable young people to progress into work and meet the employer’s needs in a cost-effective way. The same is true of the broader higher education that colleges provide and we hope that in removing the control of student places means can be found to incentivise the high quality but cost-effective employer responsive provision in colleges.

“The link between Jobcentre Plus and traineeships is also something we have sought from the outset in order to encourage uptake of the scheme through the effective removal of the 16-hour rule. This change will enable colleges to more effectively meet the needs of young people at a time of stubbornly high youth unemployment.

“Though recognising the positives in the Chancellor’s statement, colleges are still waiting for the information they need to plan their budgets for 2014/15 and remain concerned at the possibility of further real term cuts for 16 to 18- year-olds, increasing still further the 22% differential between funding pre- and post-16.”

David Hughes, chief executive of the National Institute of Adult Continuing Education (NIACE), said:

“The government deserves credit for recognising that it will not be possible to build a sustainable recovery on the basis of low-skill jobs that add little value. Britain’s competitive advantage lies in a knowledge-rich, innovative economy which utilises the skills and creativity of the entire population to the full.

“What is worrying though is the absence of announcements to help people re-skill or raise their skill levels during their working lifetime. Preparing people for entry to the labour market, whether through apprenticeships or higher education is important but it is not the whole story. Learning needs do not end when people reach their early twenties.”

Lynne Sedgmore, executive director of the education association 157 Group, said:

“The exemption of those on traineeships from the 16-hour rule is welcome, and we support any measures that aim to ensure that more young unemployed people are engaged in meaningful education and training. It will be important for those in local authorities and Jobcentre Plus to work with their local further education colleges to deliver new initiatives in this area, as colleges are the institutions best equipped to deliver the skills training needed.

“We also welcome the proposal to remove higher education student number caps, and will be working to ensure that the importance of HE delivered in FE colleges is increasingly acknowledged. We know from QAA (Quality Assurance Agency for Higher Education) reviews that the HE provision in colleges is commended more often than that delivered elsewhere, so our vital role in the HE picture must continue to grow. FE colleges deliver high-quality provision to all their learners, and we will be making the case very strongly for spending on FE to be maintained as BIS (the Department for Business, Innovation and Skills) works out where it will make further cuts to the departmental budget in 2015–16.”

Commenting on proposals for reform to apprenticeship funding, Peter Roberts, chair of the 157 Group and chief executive of Leeds City College, said: “Although the detail is not yet known, it is clear that an HM Revenue and Customs-led system for employer funding of apprenticeships has been decided upon. It is right that employers should be asked to contribute towards the cost of apprenticeships, but we remain unconvinced that either this move, or the announcement of further funding for higher apprenticeships, will actually encourage more employers to engage with the apprenticeship system. Employers consistently argue for simplicity in the system, and placing additional administrative burdens on them is unlikely to bring about the desired result.”

The Association of Employment and Learning Providers (AELP) said: “AELP recognises the need to encourage more employers to make a commitment to the apprenticeship programme. We still believe that the routing of funding through employers will create a new barrier to some employers, especially SMEs getting involved in the programme and we welcome the BIS announcement that there will be a consultation on an alternative funding route for the ‘smallest businesses’ although how this is defined will be important. From our surveys and discussions with employers, they say they want to be more involved in the development of the apprenticeship programmes but show no desire to take on the direct management of the funding.

“We are pleased to see that there will be an opportunity to review the potential impact of the proposals. We know that SMEs and employer representatives have expressed some concerns about the pace of change but we hope that the period of review is not about when the changes will be made but whether the changes will deliver the improvements predicted.

“The proposals will bring a period of uncertainty for employers and training providers when we should be focussing on the changes that will create more high quality apprenticeship opportunities, especially young people. We are pleased that the government has listened to our concerns about maintaining the programme for 16 -18 year olds but we need to see whether the additional state contribution for 16 and 17 year olds will offset the cost of the new mandatory employer contributions.

“Mandatory contributions will be a barrier to the growth of the programme for those aged over 19, especially young people who are unemployed. We have made a number of recommendations to make the programme more responsive to employers’ needs and we will work with the sector to ensure that the funding system supports high quality training and development.

“Any HMRC system has to be designed so that bureaucracy is minimised and we have to retain the flexibility of the current system. We are very concerned that the opportunity is taken to reduce the investment in apprentices at a time when we need more not less investment. We believe that there has to be a different approach for large business and SMEs. The majority of apprentices are employed in businesses that only have one or two apprentices and these employers will not want to take on the responsibility of directly managing the funding. There has to be a dual system that allows employers to choose whether to have a direct contract or work with a training provider that manages the funding. The current system allows employers to make that choice and we would support a position where more employers are given that choice.

“We share the objective of getting more employers involved in apprenticeships. Our members deliver over 70% of the apprenticeships and they will continue to work closely with their employers to maintain this high quality vocational option. We urgently need a review of the funding of Apprenticeships for those over 24 and the loan system because a fundamental change will encourage more people to progress to advanced and higher apprenticeships, including the 20,000 extra higher apprenticeship places announced today.”

Chris Jones, chief executive of awarding body City & Guilds, said: “Apprenticeships have come so far over the past few years thanks to government investment, support and focus. It’s fantastic to hear in the Autumn Statement that a budget surplus is in sight and that all the indicators point to growth in the UK economy.

“In 2012, we conducted research which showed the correlation between apprenticeships and economic growth. It showed that by creating a million apprenticeships by 2013, £4.37 billion would be added to UK business by 2020. I don’t think it is a stretch to say we are starting to see some of that play out and today’s announcement that an additional 20,000 higher apprenticeships will be created is welcome news.

“However, although it isn’t the intention, today’s Autumn Statement puts the apprenticeship system at risk.

“It’s not the focus on employer ownership that’s risky – that’s something we actually welcome. It’s the assumption that employers have the time – and indeed the will – to cope with the additional bureaucracy these reforms will entail. Rather than incentivising employers, I fear they’ll be put off by what’s been announced and decide it is simply not worth the hassle. That would be a disaster, and another generation of young people in this country would lose out.

“All employers, regardless of size, will feel the effects. The reforms will require additional resource. There will be even more hoops to jump through to establish an apprenticeship. Where is the incentive there?

“Employers should certainly be in the driving seat for apprenticeships. But without enough involvement from educators and awarding organisations, the road ahead is bumpy.

“We cannot afford to let this happen. We know that apprenticeships are core to filling skills gaps. We know that for many, they are that first step towards a career. I hope that we will be able to work with government to find a flexible, workable solution which gives employers control but also support.”