Plans to place limits on apprenticeship providers described as ‘absurd’

The founder of one of the largest providers in the country has hit out at plans by the Education and Skills Funding Agency to limit the amount of apprenticeships cash he and other providers can earn.

John Hyde, who also co-founded the Association of Employment and Learning Providers, said it would be “absurd” to introduce funding caps while billions remained unspent.

His remarks followed the announcement earlier this week by Keith Smith, the ESFA’s director of apprenticeships, that the agency intended to introduce a “financial cap in terms of how much we say you’ll be able to earn in the system” – which would apply to all providers, not just new ones.

FE Week contacted a number of the biggest apprenticeship providers for their views on the proposals.

Mr Hyde, chair of HIT Training, which had an apprenticeship allocation of almost £24 million in 2017/18, said he could “understand the rationale for doing this” but “if we’ve spent up to our cap then employers are going to walk away and look for other providers”.

The caps would have to be transparent, and made publicly available alongside information about any underspend, he said.

“It’s absurd to cap people if they have, as they do at the moment, £2 billion sitting around and not being used,” he said.

A spokesperson for the Learning Curve Group, which had apprenticeships allocations worth £7.6 million in 2017/18, said a cap on funding was useful “only if it is linked to quality and performance”.

“Care will need to be taken when implementing any cap scheme to ensure that large employers which use their levy-funding to scale are not prevented to choosing providers best-placed to deliver the best results,” he said.

Neither Lifetime Training, which had an allocation of £30 million last year, nor Babcock, which had funding worth £28.7 million, was able to respond to FE Week ahead of publication.

Mark Dawe, AELP chief executive, urged the ESFA to “adopt a risk-based approach” to introducing the caps.

“The final employer-driven model should allow employers of all sizes to freely choose a quality provider and not stifle the growth of innovative and responsive providers,” he said.

Speaking at the AELP autumn conference in Manchester on Tuesday, Mr Smith gave no detail of how any funding limits would be set or applied, and instead said the agency would be testing the approach.

“We’re going to work with you as a sector over the coming weeks to help us to identify what’s the best way to do that,” he said.

Their introduction is intended to ensure that “we have a process and a system to manage the way that organisations can be funded”, with a particular focus on new providers.

“It’s not intended to stop really super-big providers from becoming super-big, but it is there to control risk to a certain extent and it is there to control quality,” he said.

He insisted the plans were not “driven by any individual circumstances”, including the recent collapse of mega-provider Aspire Achieve Advance, leaving 4,500 apprentices and 1,500 employers without a training provider.

However, Meg Hillier, chair of the influential Commons public accounts committee, said the plans were a sign that the agency was starting to learn the lessons from both that and previous failures – including last year’s Learndirect debacle.

It also follows the collapse of First4Skills in March 2017, which held an annual £15 million apprenticeship allocation and trained as many as 6,500 apprentices a year.

“Frankly they were right in their face, thanks to some of the good work you [FE Week] did. Two big problems in the space of a year,” she said.

These problems were “foreseeable”, but “now at least they’re doing something about it”, she said.

“The limit itself may not be a complete panacea. It may be a start but there’s a lot of risks about how it may be implemented,” Ms Hillier said.