To make the apprenticeship programme sustainable SME employers need a separate budget

The National Audit Office (NAO) is right to identify the long-term financial sustainability of the apprenticeship programme as a key issue that the government must address.

The highlighting in its latest report that intermediate (starter level) apprenticeships have more than halved since the levy was introduced is also a very important finding.

According to the Association of Employment and Learning Providers (AELP), whose independent training provider members train 75% of apprentices (and not the referenced 60% which takes no account of subcontracted delivery), there is an urgent need to respond to unmet demand from SMEs for apprenticeships which has resulted from the government’s mistakes set out in the NAO report.

AELP calls for the government to restore the £1bn a year budget which was available to SMEs before the apprenticeship levy started in April 2017. 

Even with a significant underspend, the DfE have failed to adequately fund non-levy provision.  While a separate funding pot was set aside this year for SMEs, none is currently planned for after April 2020 and the projected use of the levy by the large employers in future years means that there will be no money remaining for smaller businesses to use for apprenticeships unless the government acts. 

In fact since the NAO undertook its work, the Institute for Apprenticeships (or IfATE) has confirmed that there is likely to be a £500m overspend on the £2.2bn levy proceeds for 2018-19 and the deficit is projected to rise to £1.5bn during 2021-22.

The NAO reports that the government has recognised that there are ways in which it could seek control on levy spending and AELP has already said that a review of how much government funding is available for each level of apprenticeship is needed because the cost of higher level apprenticeships has turned out to be much higher than officials forecast.  A rebalancing of the funding system should help to rectify the disastrous fall in level 2 apprenticeships which has undermined the government’s own social mobility agenda.

Although the anecdotal evidence is strong, AELP agrees with the NAO that a more substantive rationale is required to show how apprenticeships make a positive impact on workforce productivity and it is happy to work with the DfE to come up with a credible means of calculation.

The disappointing aspect of today’s helpful report is that AELP was predicting two years ago that higher level apprenticeships offered by the levy payers would consume the levy to a much greater degree than the government anticipated but no notice was taken. 

The DfE has finally recognised that changes are needed as part of the Chancellor’s ordered review of the levy and the NAO’s overspend figures confirm why a separate budget is needed for SMEs’ apprenticeships.  SMEs are desperate for more apprenticeships and we need to stop the fall in intermediate apprenticeships, so ministers must act quickly.

Assessment inconsistency must be sorted out

AELP agrees with the NAO that the IfA’s priorities on approving standards and assessment arrangements have not produced best value.  The NAO’s concerns about the lack of consistency in the assessing of apprentices’ progress under the new standards are especially well founded and in AELP’s view, Ofqual should be given sole oversight for providing quality assurance over assessment.

AELP takes slight issue with NAO over how the report uses Ofsted data to arrive at conclusions on the quality of training providers, because the numbers on their own don’t tell the whole story.  The truth is that after the reforms were introduced in 2017, Ofsted took a risk-based approach to the providers it inspected first and the fact is that Ofsted’s latest annual report finds that 4 out of 5 training providers are still good or outstanding.   In addition the government has allowed many new providers into the market and to start delivering without appropriate quality checks and monitoring.

It’s learning ON the job that counts

Regarding the NAO’s comments on off-the-job training (OTJT), it‘s not easy to measure the quality of OTJT within an apprenticeship and Ofsted agrees with AELP that just counting the hours provides no indication of quality.  

The preoccupation with this issue reveals a fundamental misunderstanding amongst many about the value of a work based learning apprenticeship and why apprenticeships are so popular with employers.  We should instead be celebrating how much apprentices learn ON the job and in the meantime, the government should accept the Commons Education Committee’s recommendation of a more flexible approach to off-the-job training according to the business sector and level of apprenticeship. 

We now have it in black and white that the DfE did not project that the number of apprenticeship starts would fall after April 2017 and yet the monthly falls were catastrophic. 

There are nonetheless good aspects of the apprenticeship reforms that we can all build on and the government and its agencies must be more willing to engage with the frontline deliverers to secure the necessary improvements and more starts.

Mark Dawe, Chief Executive, the Association of Employment and Learning Providers (AELP)