Remind me again why I pay the training budget of a $422bn company?

Remind me again why I pay the training budget of a $422bn company?

The supermarket chain Asda is owned by Walmart, which for fiscal year ending January 31, 2011 (according to Wikipedia), “reported a net income of $15.4 billion on $422 billion of revenue with a 24.7 per cent gross profit margin”, making it “the world’s 18th largest public corporation, according to the Forbes Global 2000 list, and the largest public corporation when ranked by revenue.”

I therefore nearly choked on my Morrisons cornflakes when I read that the UK government will be covering all the costs of the Walmart Apprenticeship programme. As reported last week in this newspaper, the Skills Funding Agency have handed City & Guilds their first apprenticeship training contract, and all £8 million of it will be spent on Asda employees. Walmart, nor their supermarket Asda, will be paying City & Guilds anything. How do we know this? Well, because that is what they told FE Week.

Wait, really? That can’t be right can it? But public sector funding is being slashed, ESOL course cuts, and so on. Why would our beloved Minister, John Hayes, one of the biggest critics of free workplace training (under Train to Gain) when in opposition, allow this? If Walmart and Asda really wanted this training for their staff they should spend a small fraction (about 0.08 per cent) of their $15.4 billion net income, right?

This expensive and lazy approach to spending scarce skills funding resource makes me so angry.”

It’s total utter madness, and I can think of four reasons as to why it’s been allowed to happen:

1. The National Apprenticeship [sales] Service are still paranoid they won’t achieve the increased apprenticeship recruitment targets, so are being lazy.

2. It’s a quick and cheap way for the government to buy a rise up the international league tables for first full level 2s in the workplace (the reason Train to Gain was invented by Gorden Brown when in the Treasury).

3. Maybe Asda have pointed out that the competition (Morrisions) have had money thrown at them, so it is only fair they get a similar slice of the apprenticeship big give away.

4. Apprenticeships are such a complex yet sexy policy area Asda and BIS ‘investment’ press releases remain good for business.

There are so many questions. Here are four:

1. Did the Skills Funding Agency put this £8 million contract with City & Guilds to tender to secure best value for money? If not, why not?

2. Does a contract of this size with a single employer, who is not making a cash contribution, break EU competition law (State Aid)?

3. Why is the contract not with the National Employer Service, who can negotiate rates?

4. How many of the planned 25,000 Asda apprentices are already adult employees?

This expensive and lazy approach to spending scarce skills funding resource makes me so angry. Let us not forget the ESOL discretionary Learner Support Fund has been scrapped, and it was worth just half the City & Guilds Asda contract.

Could the Asda motto: ‘saving you money every day’, be any less appropriate? Minister Hayes, you have some explaining to do.

Related FE Week articles:

City and Guilds allocated more than £8m for 25,000 Asda Apprentices

Morrisons, Elmfied and the over 25 Apprentices

External related links:

BBC Radio 4 In Business programme on supermarket apprentices