College governors have branded the SFA’s new apprenticeship contractual arrangements “ludicrous” during a heated discussion at the AoC’s Governance Summit.
There is due to be a shift from contracts between the SFA and colleges to legal agreements between colleges and employers – which will amount to “a commercial relationship” with employers – according to Keith Smith, the SFA’s director of funding and programmes.
“You are entering into a commercial relationship with an employer because they are choosing to use you and buy services from you,” he told attendees.
Stunned governors were urged “make sure you know what you are selling” and to “understand you have the right terms and conditions to protect yourself” if an employer decides to end the relationship.
The discussion soon became heated, as governors expressed their shock at the new arrangements – which will also see employers drawing up their own separate contracts with the SFA.
One unnamed governor blasted the system as “ludicrous” and a “nightmare”.
“I can see people walking away from contracts and there is no incentive to enforce it,” he warned. “The legal fees for doing so could swamp the potential gain.”
Mr Smith admitted in response that commercial relationships between colleges and employers did risk becoming “tricky, rocky and volatile”.
He continued: “That’s why I say to you when you enter into these relationships, what indemnity and safeguards have you put in place?”
But he insisted that employers “can’t walk away from paying the levy and can’t walk away taking money out of the account and do something else with it”.
From his point of view, he said, these contracts mean that the SFA would get the levy cash one way or another, and that his department would “make sure it’s spent for the benefit of apprenticeships”.
Earlier in the session, he warned governors that the SFA would not step in if colleges have any contract disputes with employers, saying: “I can’t get involved in any contractual dispute or commercial disputes when the employer has instructed me to stop paying you.”
Nor can the SFA get involved in contract negotiations between employers and providers – “that’s for you now,” said Mr Smith.
Governors were therefore urged to ensure that management teams were aware of the upcoming changes.
The “safety nets” created by the involvement of the SFA were due to “change significantly”, he said, “and you just need to be aware of the risks of these things”.
“As a governing body you need to make sure you are quizzing and questioning your management teams on how on the ball they are,” he went on.
“If they say ‘don’t worry, this is all normal, we do this all the time’, then I would probably worry.”
Julian Gravatt, AoC’s assistant chief executive, said his organisation had been working with colleges to prepare for the reforms “for several years”.
“Getting the relationship between employer, apprentice and college right will be vital to make this work,” he said.
“Employers will clearly now have the ability to change their mind if colleges get things wrong.
“But it is inevitable that the government will need to intervene in some cases to protect the apprentice and to ensure that training continues in the right areas.”
Mark Dawe, chief executive of AELP, said: “Independent training providers welcome this brave new world. They are used to dealing with employers in negotiating agreements.”