Don’t Reform the Reforms!

It’s too early to ‘reform’ the apprenticeship reforms because numbers are declining at SMEs.

When the latest apprenticeship start figures were released on 14th June showing a 52% decline from March 2018 compared to March 2017, there was the usual calls to ‘reform the reforms’.

However it is too early to say the apprenticeship reforms are failing just because of the drop in starts at SMEs.

The reforms haven’t even been fully implemented yet and there are several key reasons for a drop in starts that will right themselves over time…

What calls for change am I referring too?

The loudest call for change this week came as AELP released a submission on ‘The Importance of Level 2 Skills’. One of their recommendations was ‘For 16-24 year olds at L2 and L3, there should be no employer contribution for non-levy payers or for those that exceed their levy.’

This need to offer free training to SMEs, because otherwise they won’t pay for it – is not just something AELP is lobbying for, but a growing number of voices in the sector seem to be backing.

However, as a Managing Director of a company that offers free apprenticeship advice to SMEs, I’d like to offer some balance to an argument I think is extremely short-sighted:

• Firstly, why is a report on Level 2 Skills slipping in a call for free training at Level 3?
• Secondly, as a sector, we must work harder to articulate to employers the impact training has on their business so they have no hesitation in paying for a quality service
• Thirdly, we have to put off the less ethical employers that only see apprenticeships as a way to employ someone on less than minimum wage. If paying a few hundred quid for high quality training is not worth their investment – good – let them go!

So why are apprenticeship starts at SMEs falling if it isn’t because 10% is too much to pay?

So far there have been changes to the apprenticeship reforms that have had huge repercussions on SMEs uptake that no one seems to be talking about and that will be solved as the reforms are given time to bed in….

Subcontracting Rules

In 2017 prime providers could subcontract out their apprenticeship allocation without having to deliver any of the training. Now, ‘You must directly deliver some of the apprenticeship training and/or on-programme assessment associated with each employer’s apprenticeship programme’.

This is a huge change. For example, West Notts College had an £18.9m apprenticeship contract in 2016/17 yet subcontracted 82.4% of their allocation. They were not delivering that training, their subcontractors were, so this one contract alone has cut £15.5m worth of training from the sector – most of which would have been delivered to SMEs. Multiply this example across the industry and you can see that the figures would fall dramatically.

In essence, many primes weren’t delivering the training to SMEs – that on the surface it looked like they were – they have now chosen to cut jobs or focus on other training instead. This affects starts in SMEs.

Non-Levy Allocation

Coupled with the subcontracting rules, the ESFA has taken a phased approach to moving apprenticeship allocations to more of a free market model, by introducing a ‘non-levy apprenticeship allocation’ until April 2019.

However well intentioned this policy is in protecting quality, there is no doubt it is having an impact on apprenticeship starts with SMEs because it limits the number of providers that can deliver.

For example, The Derbyshire Network had 24 subcontractors on its books in 2016/17, delivering over £2m worth of training. Most of this funding went to small providers weaved into the fabric of their business communities in towns and cities around the East Midlands and Yorkshire. Their appeal to employers was they were local and understood their area and people.

Yet, The Derbyshire Network has not secured an ESFA non-levy allocation.

This means those 24 small training providers cannot deliver apprenticeship to the businesses they were supporting before. Instead, the employers have stopped recruiting apprentices until they can work with the providers they know and trust again. This affects starts in SMEs.

In April 2019, all providers on RoATP will be able to deliver to all businesses (no matter what size).

If there is genuine concern in the sector for the number of starts declining, rather than champion more financial incentives, perhaps we should come together and call for the date when all providers are able to deliver to any size of employer to be pushed forward six months?

Employer Engagement

OK, so this is a particular bugbear of mine as I provide employer engagement and marketing services to providers, but generally speaking (and there are wonderful exceptions) how apprenticeship training is sold to SMEs has not caught up with the apprenticeship reforms – yet!

We’ve known about the 10% contribution for a long-time, yet the vast majority of employer packs and presentations I see from college and training provider staff make no reference to:

• How their training will create a return on investment
• Examples of money saved/income generated from employers employing apprentices
• That 59% of employers believe training for talent is more cost effective than recruiting for skill
• That there is no employer N.I. contribution for apprentice under 25
• That apprenticeship programmes increase staff loyalty

And the list goes on and on…

In fact, it is with great pain that I do know of providers, that rather than spend time working out how best to articulate the ‘value’ their training brings, are instead telling small employers that apprenticeships are again only for 16-18 year olds.

This means they can just say ‘free training’ like nothing has ever changed. A practice that has to stop if we ever want to create an apprenticeships system as highly regarded by employers as those in countries such as Germany or Switzerland. This affects starts at SMEs.

So… what is the point I’m trying to make?

As I said above, SupplyTrain is a not-for-profit organisation that offers free apprenticeship advice to small employers. This means it would be ridiculously easy for me to back the ‘free training for SMEs’ argument that is doing the rounds right now, but that’s just it, it’s the easy option, not the right one.

We need to stop holding up a ridiculous government pledge to starts as some kind of trump card over reasoned debate on the best way forward. Give the reforms time to bed in, they are aimed at increasing quality for apprentice and business after all. Wait until 2020. Once the dust has settled, then we can genuinely see what the problems are and what to lobby for to make even more progress.

Surely, we all want quality over quantity for the apprentice and their future job prospects, no matter what size business they are employed in?

In my experience, any business, no matter what size, will pay for a service if they are convinced it will add value.

So, please stop using SME starts as a reason to ‘reform the reforms’ and get on with delivering exceptional training that employers will be falling over themselves to pay for their staff to take.

Phil Golding, Managing Director, SupplyTrain CIC

Copyright © 2018 FE News

About SupplyTrain: They provide free, impartial apprenticeship advice to employers that cannot get the training their business needs. Their staff explain the business case for apprenticeships and put them in touch with the right training provider – to maintain impartiality, they do not take commission from the training provider for this service. They also work with training providers, colleges, LEPs, councils and universities on marketing apprenticeships, employer engagement and strategy. For further details please email Phil Golding, or call 07902 843 051.