Ambitious apprenticeship plans are yet to convince employers

Ian Nash of the Policy Consortium reports from the recent AELP Annual Conference, and particularly on the current state of play regarding apprenticeship funding.

Radical plans from the Coalition Government to give employers full control over the funding and design of apprenticeships have failed to convince the world of business, or the training providers who currently manage off-the-job training and assessment, that the initiative can succeed.

Behind all the ministerial rhetoric about record-level rises in numbers of apprenticeships lies a sad truth – the Coalition Government is no nearer a sound funding policy for the re-skilling of Britain through apprenticeships than it was when it came to power. It boasts a six-fold increase in higher-level apprenticeships since 2012; but that’s merely a rise from 100 to 600 participants.

But it’s not only in the numbers game where the government has more trouble than it will admit to – it is heading into stormy waters over the rights and responsibilities of employers in this area of training. While few argue against employers having maximum control, there is fierce opposition to reforms which would require mandatory cash payments from employers while channelling government subsidies directly to the employer, either through the PAYE system or via training credits into online accounts.

The strength of resistance emerged earlier this month at the annual conference of the Association for Employment and Learning Providers (AELP) in London. Employers said that unless they could pay their share “in kind” rather than cash, the scheme would be unaffordable, particularly for small businesses. They were also unconvinced – despite government assurances to the contrary – that the bureaucratic burden would be anything but costly and unmanageable for the vast army of small businesses on which the government depends to make the scheme a success.

Only 8-10% of employers take on apprentices in the UK (one of the lowest participation rates in the developed world), and Government promises to pay two-thirds of costs, worth between £2,000 and £18,000, has failed to sway them. When you look at the average duration of apprenticeships in the UK, it is a pitiful one to two years; whereas in Germany and other leading competitor nations it is three.

Vital support from the CBI for the reforms seems to be waning. The confederation’s employment and skills director Neil Carberry told Matthew Hancock, the FE and skills minister, at the conference: “Business wants co-investment, not co-payment”. He also backed many members, particularly in manufacturing, who are calling for a choice either to take the cash directly or to channel it through training providers. While control should ultimately be with the employer, he said, change needed time. “We can see the case for more direct funding but it is a case of working this through.”

Hancock refused to accept the arguments and insisted sweeping changes would happen suddenly, soon after the introduction of trailblazer schemes next year, where volunteer companies would mark out the future direction of apprenticeships. He likened the change to the “big switchover to digital TV” and insisted “employers value what they pay for and pay for what they value”. Does Hancock really see the digital switchover as a success? He must have a very short memory.

However, officials at the conference appeared to take the government’s foot off the accelerator. Jennifer Coupland, Deputy Director of the Joint Apprenticeships Unit at BIS/DfE, said: “What we are looking for is cash contributions; we won’t be counting income; we won’t be counting apprenticeship salaries.” But it then became apparent from her subsequent comments that the speed of change was being overstated by ministers. She expressed disquiet over the threat of small to medium enterprises (SMEs) to boycott apprenticeships. “There are still concerns about whether SMEs will be part of this,” she said. While ministers are trumpeting a full switch by 2016, Whitehall officials are privately suggesting that 2018 would be more realistic. But even then, the “cash only” approach won’t win employers over.

So the big question on the lips of many employers and training providers during and since the conference is why, in its fifth year, the Coalition Government should be arguing the case for such fundamental changes eleven months before a General Election. What had happened in the interim? If ministers were so convinced more than four years ago about the need for employer ownership, why were they still running “trailblazers” and still unready to implement a firm policy now? It was seen as either an admission of failure or an effort to woo the restive right wing of the Tory back bench. The word “trailblazer” sounds more decisive than “pilot”, which is what the scheme really is.

But what lies behind the hype? Hancock stresses the successes of an apprenticeship revolution already embarked on, the record recruitment and success rates and the elimination of short ineffective apprenticeships. But he fails to point out that much of the problem provision he claims to have eliminated was the result of rushed Coalition reforms in the first place. It took the delegates at the AELP conference to remind him that the successes were actually the result of a reform agenda stretching back at least ten-years. Moreover, there has been a succession of apprenticeship inquiries in the past four years, not least the Holt and Richard reviews, from which the government is now seen as cherry-picking its way forward against the clearly-expressed preferences of the majority of interested parties during extensive consultations.

So, now we have yet more proposals out for consultation, to put state funding of apprenticeships directly in the hands of employers. Hancock describes the AELP as his “sales force” and “private army” in the struggle to win employers and support their apprenticeship training initiatives. Unfortunately for him, the troops are voting with their feet. When 200 conference delegates were asked to vote on various aspects of the proposals, fewer than one in ten (9 per cent) expected his reforms to spur new or existing businesses to offer more apprenticeships. There was not much more optimism from the CBI or Federation of Small Businesses.

There is an overwhelming air of scepticism. Employer take-up of apprenticeships is low because government funding was capped to this figure, they say. And when Hancock suggested the cap would be lifted, the general conclusion was that it would be done so simply by increasing the burden on employers.

The latest government proposals look generous. As Mick Fletcher has written recently, on this website, the spin on the proposals is ‘£2 for £1’ – government will match employer funding at a ratio of 2:1, up to a set cap per standard. But as his analysis shows, the proposals won’t lever in more employer cash, they won’t lead to a cut in prices and they come with a complicated array of caps, bonuses and staggered payments.

The Government is missing the point entirely when it comes to funding. The growth of apprenticeships has not been held back by budget constraints.  In recent years, the Skills Funding Agency has failed to spend the apprenticeships budget even when some dodgy practices were allowed. BIS are not worried about costs because for every full-time student who takes up an apprenticeship they save at least £4,000 in FE, school or HE spending.

The problem is one that has dogged government after government. What constitutes a fair employer contribution? How is it measured? It is an issue that Hancock’s predecessor and FE and skills minister John Hayes said would be solved within the lifetime of this government. The only certainty in all this is that it will not be solved.