Mark Dawe explains warns against hasty decisions being made over subcontracting because of a new Skills Funding Agency (SFA) review on brokering.
The SFA review of the use of brokers in relation to subcontracted skills provision should not be a reason in itself to add further weight to calls for an outright ban in subcontracting.
At AELP, we are under no illusions that the future of subcontracting as a whole is under the spotlight.
It is an indictment of the current system that the opportunities to pursue subcontracted business are now so numerous
The SFA has decided to ban subcontracting for all loans funded provision from 2017-18, while at the same time the total loans facility being offered to colleges and providers is being increased by 29 per cent.
It will be interesting to see if the larger facility can be exhausted without subcontractors in the market, even with the agency actively approaching current subcontractors to see if they want direct access to it.
The other shift in policy is that under the levy system for apprenticeships, subcontractors will be able to redeem their employers’ digital vouchers directly with the SFA, if they are on the Register of Training Organisations (ROTO).
Given the implications of a large number of providers possibly taking advantage, this has necessitated an agency review of the capacity and capability tests that need to be satisfied before a provider is admitted.
We have always said that a key tenet of the apprenticeship reforms should be the upholding of employer choice, which actually exists under the current system.
But the reform process needs to be managed, so as not to cause unreasonable disruption to customer relationships that have worked well and delivered successful results.
It is arguably the scale of subcontracting and the associated payment of management fees that have prompted this policy response.
Yet the AELP case is that this could have been avoided if the current funding system worked better.
Growth of good performing independent training providers through a direct contract has often been restricted, even though new employer demand has been clearly evidenced.
So it is hardly a surprise that as entrepreneurial businesses, they have gone looking for it from other sources, particularly from institutions that either don’t have a work based learning capability or a strong employer engagement strategy.
The biggest frustration of the handling of providers’ growth requests over the last year or so has been that committed employers willing to offer apprenticeships have had to be turned away, because there was no guarantee that funding would be forthcoming.
But it is also an indictment of the current system that the opportunities to pursue subcontracted business are now so numerous that brokers are able to flourish as part of the market.
On the issue of subcontracting best practice and the question of justifiable management fees, AELP alongside the Association of Colleges made a major effort to bring about improvements three years ago in the form of the Common Accord.
And although the accord has a reference within the funding rules, its voluntary status could have arguably been bolstered by more forceful backing from the authorities.
The case for allowing subcontracting to continue to be part of publicly funded employment and skills provision has been persuasively set out elsewhere, such as providing employers access to specialist providers in complex areas such as construction projects.
The largest levy paying employers are likely to want to do deal with only one provider, but it shouldn’t be expected that a single provider can deliver everything the employer needs.
For example, how often will a level two apprenticeship provider in call centre operations be able to also offer a level seven in management?
Therefore, it would seem appropriate to encourage strong partnerships of providers to ensure employers get outstanding provision across all their requirements and not prevent such practice through artificial restrictions.
Before any further policy decisions are made, it would certainly be very helpful for the SFA to publish a clear statement of what the Agency deems as subcontracting.