Employers will have to sign government levy contracts

Employers will have to sign government levy contracts

Businesses are increasingly jittery over the apprenticeship levy, after it was revealed that they would have to sign strict contracts with the Skills Funding Agency – rather than just with providers, as the sector had expected.

The CBI says it is “concerned” that the existence of these contracts had only “come to light” at this late stage, especially because company procurement processes are already “complex and time-consuming to change”.

The policy only came to light while FE Week was asking the SFA about an unrelated matter – whether providers paying to access employer levy pots would break bribery laws, an issue which has been worrying the Association of Employment and Learning Providers.

In the SFA’s response, they let slip that there would be “agreements between the SFA and the employer” – a condition that has never previously been mentioned publicly.

The SFA spokesperson said: “In the contractual arrangements between the SFA and the employer this practice will be prohibited. This will be mirrored in agreements between the SFA and providers.”

These contracts will come as a major shock to the sector, given that the government’s message to date has been that the only financial relationship for employers would be with the provider.

The news has worried business groups. Pippa Morgan, head of group at the CBI admitted that they’d only just been made aware of the plans, and that the policy change had forced them to go back to their members.

“We are concerned this is only coming to light now,” she told FE Week, “as company procurement process are complex and time consuming to change. The outcome of all this needs to be something that enables firms to buy the training they need, while avoiding gaming of the system.”

Mark Dawe, the chief executive of the Association of Employment and Learning Providers, echoed these concerns, and said that he hadn’t expected any significant bridge between employers and the government.

He said: “Our understanding was that the primary relationship was between the employer and the provider although there will obviously be rules around how the levy can be used.

“We look forward to seeing and commenting on any further proposals the SFA might have. Indeed we are looking forward to a whole range of detail in relation to the register and funding that will enable our members and employers to start planning with certainty.”

Under the current proposals, apprenticeship starts will be funded from May 1, with 15 bands ranging between £1,500 and £27,000, with employers negotiating the final price with training providers.

But the National Audit Office has previously warned that without more robust risk planning, the apprenticeship reform programme risks repeating the fraud that plagued Individual Learning Accounts in 2001.

Their message came in a damning report published last week on delivering value through apprenticeships.

A DfE spokesperson said at the time that it would consider the NAO’s recommendations, while the SFA said “counter-fraud measures” were being set up for the apprenticeship funding programme.

Editor Nick Linford wrote about why the apprenticeship levy is ‘just another tax‘ on employers.