Employers need greater incentives to invest in apprenticeships, say UKCES

A single skills market is needed to make employers invest more in apprenticeships and training, according to a report published today by the UK Commission for Employment and Skills (UKCES).

The document, titled ‘Employer Ownership of Skills’, says “more can be done to leverage additional employer investment”, and that government schemes have led to “significant dead-weight” when trying to engage businesses in training.

The report calls for a revised funding system which would give employers more responsibility and greater incentives to invest in employer-facing programmes such as apprenticeships.

Charlie Mayfield, Chairman of UKCES, said: “We need a single market for skills development into which employers and employees are prepared to make a greater contribution for higher quality training.

“For young people, this means moving from provider grants to employer incentives for apprenticeships and work experience; and for adults, shifting from provider grants to employer investments and loans.”

John Cridland, Director-General of the CBI, added: “I believe the most powerful way to achieve a world-class workforce is to change the way in which funding flows through the system, and to place responsibility and reward for investment more squarely with employers for programmes such as Apprenticeships.”

Recommendations in the report include funding more employers directly for apprenticeship programmes, either through the tax system, such as National Insurance rebates, or incentivised work experience.

The report states: “Putting purchasing power in employers’ hands would drive up quality and responsiveness among the training provider network.

“Many colleges and training providers already have excellent partnerships with employers, providing high quality apprenticeships.

“By routing funding through employers this would create a sense of ownership that, over time, would further strengthen overall employer commitment to the apprenticeship programme.”

The report adds that the government should move from a qualification-based funding system to one with an increased focus on employer based investments and loans.

“Current policy is to introduce individual income contingent loans for apprenticeships at Level 3 and above for those aged over 24 from 2013/14,” the document states.

“We propose that these loans should flow through employers to ensure greater employer ownership.”

The report suggests that funding employers directly would also help to strengthen the apprenticeship brand.

Mr Mayfield said: “This is about more than just transferring funding.

“It is about transforming our entire approach.

“Government needs to step back and review where it is encouraging greater employer ownership and, frankly, where it is getting in the way.”

The report argues that under a revised system, employers would contribute more because they “would have more at stake”, such as investments which are “hardwired” into incentive-based models.

It later adds that a revised system would allow colleges to focus on innovation and quality, rather than sheer volume or government-led priorities.

Business Secretary Vince Cable, attending the launch of the report, said: “Businesses are better placed than Government to design and deliver the skills they need to grow.

“That’s why we are creating an employer-led skills system that directly responds to employers training needs, including for higher-level skills up to degree level.”