The National Audit Office passes judgement on adult apprenticeships

The National Audit Office (NAO) has published its ‘Adult Apprenticeships’ report today, which looks into “whether the Department for Business, Innovation and Skills (BIS) is obtaining value for money from the Apprenticeships programme”.

FE Week took a look at some of the key findings in the NAO report.

Value for money

Adult apprenticeships offer good value for money, but the government needs to focus its resources on industries which offer the best economic returns, the NAO claims.

The independent body says the BIS needs to “set its sights higher” on the apprenticeship programme, despite exceeding all previous expansion targets.

Amyas Morse, head of the NAO, said: “The apprenticeships programme has been providing a good return for public spending.

“Nevertheless, the Department should set its sights higher in order to get better value from the £0.5 billion and rising now spent on adult apprenticeships each year.”

The apprenticeship programme has increased by 140 per cent during the last five years, of which 68 per cent were learners aged 25 or above.

Previous recruitment targets set by government were smashed, at least in part, by the 182,100 new adult apprenticeship starts in 2010/11.

The NAO report criticised both BIS and the National Apprenticeship Service (NAS) for not targeting the qualifications, frameworks or age groups which will have the biggest impact on the economy.

The report states: “The Department needs robust evidence to identify which qualifications are having most impact and where the additionality delivered against public funding is greatest.

“The Department should use this information to decide where to target its resources. It has recently announced its intention to do so, though has yet to publish details.”

It later adds: “It has recently announced its intention to do so, though has yet to publish details.”

More than 80 per cent of the total  expansion in apprenticeships between 2006/07 and 2010/11 was covered by 10 occupations, with health and social care, customer service and retail coming out on top.

Meanwhile, engineering apprenticeships contributed just 2 per cent to the five year growth across all age groups.

Funding rates unreliable

The funding rates used to pay training providers for delivering an apprenticeship is not based on robust information, according to the NAO.

The NAO says the Skills Funding Agency (SFA) and NAS have set tariffs without “reliable evidence” to support estimated training costs.

The ‘Adult Apprenticeships’ report states: “The Agency and the Service currently set tariffs without sufficiently robust information on the cost of provision.

“This may mean that some frameworks have become more financially attractive to offer than others.”

The NAO say both the SFA and NAS are unable to judge the extent to which providers may be generating significant profits or losses as a result of inaccurate  rates.

Skewed funding rates on individual frameworks has led to some employers not paying the expected contributions towards training providers’ costs.

The report states: “Employers pay apprentices’ wages and deliver on-the-job training, but some are not paying the expected contributions towards training providers’ costs.

“Employers are required to contribute towards the cost of adult apprenticeships, and the funding rates paid to providers assume employers contribute at least half of the training costs, either in cash or ‘in kind’.

“However, evidence suggests that some employers do not pay the required contributions.”

The report references a survey, conducted in 2009, which found that 43 per cent of providers choose not to collect fees from employers.

“With full contributions from employers, government funding could deliver more or higher quality apprenticeships for the same cost,” the report states.

Amyas Morse, head of the NAO, said: “It [BIS] needs to target resources more effectively; confirm the training provided is in addition to what would have been provided without public support; and make sure that the funding system is informed by robust information on the cost of delivery.”

The unknown level of ‘dead-weight’

The value of adult apprenticeships is being exposed to significant dead-weight, according to the NAO.

The NAO says “optimistic” figures produced by the BIS assume all of the training delivered by apprenticeships would not have occurred without public support.

The criticism follows statistics by BIS, reported in March 2011, which estimate that adult apprenticeships deliver a return of roughly £28 for every £1 of public spending.

The NAO says the programme produces a return closer to £18 when considering all levels of an apprenticeship.

“The difference between our figures and those of the Department reflects the sensitivity of the calculations to the underlying assumptions, in particular our respective assessments of the available evidence on the potential wider impact of the training on the productivity of the workforce,” the report states.

The NAO says BIS has failed to assess the level of additionality (the extent to which public funding results in training that would “not otherwise have occurred) being delivered by the apprenticeship programme.

The report states: “The Department assumes that, for economic returns to apprenticeships, all public funding achieves additionality, but lacks data to support this; therefore any reduction in additionality would result in an equivalent reduction in the economic returns.”

The NAO says BIS has an evaluation in progress which will help them to measure the additionality of the apprenticeship programme, with results available in early 2012.

One in five adult apprenticeships lasted less than six months

A growing number of adult apprenticeships are being delivered in under half a year, the NAO has revealed.

The report says 34,600 apprenticeships were delivered by providers in less than six months in 2010/11, making up nearly a fifth of completions for learners aged 25 and above.

A further 6,200 ( three per cent of adult completions) were found to be less than three months long.

The NAO says the rapid expansion of the apprenticeship programme “presents risks that need to be managed.”

“In four of the top ten fastest-expanding subjects around a quarter or more apprentices completed in six months or less (2010/11),” the report states.

“In one of the fastest-growing subjects, IT and telecoms professionals, over two-thirds (68 per cent) completed in under six months.”

The SFA and NAS are currently investigating 87 providers thought to be delivering ‘short duration’ apprenticeships and have said they will be checking to see if providers are complying with their contractual obligations, and will close down provision if necessary.

“The growth in shorter-duration apprenticeships may reflect increasing take-up of frameworks which require less training, and growing numbers of over-25s, who may be allowed to complete more quickly owing to their prior experience,” the NAO report states.

The NAO report also reveals that the BIS hopes to publish revised data on the length of apprenticeships in February 2012.