AELP calls for immediate action to save the skills system

AELP is calling for immediate action from the government to save the skills system or risk a situation where learners will see a drastically reduced choice in where and what they’re able to learn.

The Association of Employment and Learning Providers (AELP) has warned that the skills sector is under immense threat due to a perfect storm of rising costs, reduced Adult Education Budget (AEB) funding, the end of the traineeship programme and an apprenticeship system where funding bands have experienced real term cuts since their introduction in 2017.

Following news that another major training provider is under threat of insolvency, AELP has said this should be seen as a wake-up call for government and that support is needed urgently to avoid major impact on learners, employers and providers themselves. This follows numerous examples of providers withdrawing from the apprenticeship market and existing training providers having to slash the range of programmes they offer as they no longer become affordable to deliver, leading to widespread redundancies.

To save the skills system, AELP is calling for:

• Immediate support for apprenticeship providers with an across-the-board uplift of 10% in funding for all apprenticeship standards; as well as raising the maximum government contribution above the current £27,000; and introduce a minimum government contribution of £5,000 per year across all apprenticeships.    
• A long-term plan to stabilise the skills sector, through a sustainable and integrated National Skills Strategy that identifies and properly funds the country’s skills needs.    

On the back of this call, AELP is launching a survey to gain further insight into the supply of apprenticeship standards and how this is being impacted by providers’ financial health.

Nichola Hay MBE, Chair of AELP, said:

“Last week another major training provider revealed financial difficulties which could affect their ability to continue trading. Unfortunately, they won’t be the last to suffer. AELP has been clear that the warning signs have been there for some time with other providers scaling back their operations in recent months. This will have a direct impact on the availability and choice for learners and employers.

Spiralling costs for providers combined with traineeships contracts and non-devolved adult education budget contracts ending at similar times, alongside an apprenticeship funding review system that takes far too long has created a perfect storm which will continue without urgent action.” 

“We are faced with a grave situation, where the skills system risks total collapse. This would inevitably have a huge impact on learners and employers, as providers withdraw from the market and their choice is drastically reduced. At a time where skills are vital in our country’s plan for growth and stability, we need a quick government response to save the skills sector, including an immediate 10% across the board rise in funding for all apprenticeship standards, alongside a long-term plan to stabilise the skills system.”

What is causing the crisis in the skills sector?

• In December 2022, over 130 independent training providers were informed that their 16-18 Traineeship contracts would cease from July 2023. Following a review by the DfE a small number of 16-19 contracts were offered in May 2023, but a number of providers turned this down as they had already closed their provision as the process took too long.

• The results of the non-devolved ESFA procured adult education budget was delayed with an outcome finally published in July 2023, giving the 55 existing providers who were unsuccessful less than a month to close their operation. Many of these providers also delivered Traineeships. New contract winners have still not been given a contract with less than a week to go until the start of August – analysis shows that 39% of the latest winners are either graded as required improved by Ofsted or have yet to have a full inspection outcome. 

• Reviews of apprenticeship funding rates are taking too long. The exceptional funding band review for apprenticeships failed to deliver in a timely manner, with 50% of standards in the review deferred to a wider review of both the content and funding.

• There has been no increase to apprenticeship funding band thresholds since 2017. For example, top funding band remains at £27k and there have limited increases to standards within the other bandings. If this had risen with inflation this would now be set at £31,440.

• Critical funding rates for functional skills qualifications for apprenticeship provision haven’t increased in nearly a decade and are half that of other programmes.

• Suppliers in the sector such as end point assessment organisations and awarding organisations are experiencing cost increases which are passed on to providers.

• Recent analysis by AELP shows that over the past three years the skills sector has been short-changed by over £1 billion. This comes through a combination of HM Treasury not allocating increased Apprenticeship Levy take to the apprenticeship programme budget and apprenticeship programme budget underspend. This is expected to continue over the next two years based on forecasts.