Labour’s apprenticeship proposals could cost taxpayers as much as £11.7bn over the course of the next parliament, according to Treasury research.

Costings of 28 Labour policies were published on Monday (January 5), including three on apprenticeships and a further four affecting the wider FE and skills sector (see below). They suggested Labour’s spending plans would include £1.5bn on apprenticeships in the first year alone.

Chancellor George Osborne (pictured right) said: “This is an objective, thorough, and detailed cost analysis of Labour’s policy agenda.”

But in Labour’s rebuttal, published the following day, Shadow Chancellor Ed Balls (main pic, above), described the costings as “riddled with untruths and errors” and “a political smear based on false assumptions”.

Dr Lynne Sedgemore, 157 Group executive director, said exchanging “hypothetical figures” was “unhelpful” especially when both main parties support broadly similar policy themes in regard to skills — an increase in apprenticeships, more training for those out of work and the establishment of new types of institution.

“If the cost of policies is to be a focus for the election campaign, we hope that the clear return on investment — both economic and social — delivered by a thriving, high quality skills system will also be factored fairly into the debate,” she said.

Association of Employment and Learning Providers chief executive Stewart Segal said: “None of these Labour policy options have been set out in any detail. The costings of these policy options are also fairly speculative and much will depend on the detail of the proposals.”

He added: “The positive return on investment of these programmes to the UK economy has been proven time and again so it not just a question of cost.”

A spokesperson for the Association of Colleges said: “It is important that whoever forms the next Government is mindful of what colleges need.”

Labour’s apprenticeship policies costed by the Treasury were, firstly, plans to make all apprenticeships level three and above and to increase the minimum duration from one to two years for non-technical apprenticeships and three years for technical ones.

The Treasury’s costings for 19+ apprenticeships, based on the current apprenticeship funding system, put the price tag at £3.8bn in the next parliament, and £680m in the next year.

However, the Labour rebuttal document said their policy was about quality in apprenticeships, not quantity.

“In reality it would not cost any additional money… because it makes no commitment on the total number of apprentices,” the document said.

“Our policy is about requiring that short courses that do not meet a minimum standard are not misleadingly branded as apprenticeships.”

Labour has, however, said it would like the number of school leavers applying for apprenticeships increase to match the number starting university by 2025.

And on this, the second costing assumes 185,000 18-year-olds start university in 2025 (based on projections from the Department for Business, Innovation and Skills), and apprenticeship costs remain the same as 2013/14. The Treasury costing therefore estimates the total cost over the next parliament, will be £5.5bn and £710m in 2015-16.

Labour rejected this, saying: “Ed Miliband made clear in his speech to Labour Party Conference September 2014 that this is a national goal for 2025, not a policy for immediate implementation.”

Labour has also said it would ensure that all public procurement contracts would include a requirement to hire one apprentice for each £1m awarded in the contract. The third Treasury costing puts forward three financial outcomes for this.

The first assumes that any costs to the employer, such as salary, supervision, recruitment and administration are passed on to government by raising the contract price — resulting in a bill of £1.1bn to £2.4bn over the next parliament and up to £234m in the first year.

The second assumes only the apprentice’s salary is reclaimed, costing up to £1.1bn over the next parliament and £67m to £107m in the next year.

The third assumes the employer “nets off” the productive contribution the apprentice makes to the business and the savings on fully trained workers’ salaries, from the apprentice’s salary, but still passes other costs on to Government, costing up to £1.4bn over the next parliament and up to £144m in the next year.

However, Labour said: “This policy would not lead to any additional spending on procurement over existing procurement budgets. Instead, this policy is about changing the requirements on the companies ahead of bidding for contracts and changing the way companies recruit rather than increasing costs.”

£1.4bn to build100 new UTCs

One of the policies costed by the Treasury is a suggestion made by Lord Adonis in his review, Mending the Fractured Economy: Starter State, Better Jobs, published in July, that 100 new University Technical Colleges (UTCs) should be opened by 2020.

The Treasury costing estimates a total of at least £1.419bn by 2025, assuming all new UTCs are up and running by 2020.

By far the biggest cost laid out in the document would be the capital cost to construct buildings, which the costings calculate at £1,315m up until 2022-23.

The total cost in the next Parliament (2015 until 2020) would be £1,112.18m.

However, Labour denied the idea of opening 100 new UTCs was even official Labour policy.

“What the government has costed is an idea proposed in the Adonis Review, which does not constitute Labour Party policy,” Labour’s rebuttal document said.

It also dismissed the costing figures as “wrong,” adding: “The Government has said itself that it would open more UTCs and we support this policy since it will take place within existing capital budgets.”

Detailed breakdown of the Treasury’s controversial financial estimates

All FE teachers must be qualified or working towards it

Treasury costing says:

• If costs include training new teachers and existing ones without qualifications (who should have completed by 2017/18) total cost over four years would be £433m for the FE sector
• Including school teachers, the total cost of ensuring all teachers were qualified in 2015/16 would be £177m (£122m for FE, £55m for schools)

Labour says:

“This costing is wrong.

“We would manage this within existing budgets, just as the last Labour government did.

“Our policy would ensure that over time FE lecturers would train in greater numbers, it is wrong to assume that it would be any specific number in 2015-16.”

All Jobseekers to be assessed for maths and English and IT and required to take up training if they fall below a certain standard

Treasury costing says:

• If jobseekers need level one English and entry level three maths, each qualification costs £714 and around 1,062,000 claimants needed screening, it would cost £513m in the first year
• This figure includes the cost of screening claimants and providing training for those who need it

Labour says:

“Funding is already provided to train adults who lack basic skills, so this policy will not impose additional costs.

“The government’s own Skills Funding Statement sets out that funding is already available for adults in receipt of benefits where skills training will help them into work.”

Out of work benefits for 18 to 21s replaced with a new youth allowance dependent on young people being in training. This would be means tested and apply to those without a level three qualification

Treasury costing says:

• If youth allowance is paid at £57.35 per week, like JobSeeker’s Allowance and uses the same means test as university funding (tapering from £25,000 to £42,000), and if the numbers of unemployed people aged 18 to 21 remain the same, the policy would cost £1.1bn to £1.4bm
• However, the Treasury also estimates the policy would save £20m

Labour says:

“The Tories have examined only a limited range of options for how to deliver this change. We have been clear that there will be no proposals for borrowing in our manifesto, and that we will deliver this policy in a cost-neutral fashion.”

Sector leaders have called for more detail about how a new company set up by government to improve careers advice will operate after Education Secretary Nicky Morgan (pictured) “evaded” MPs’ questions about the organisation.

The Association of Colleges (AoC) and Association of Employment and Learning Providers (AELP) said answers given by Ms Morgan when she appeared in front of the Education Select Committee on Wednesday (January 7) did not go far enough to allay concerns about careers advice.

During the hearing, Ms Morgan confirmed the initial £20m funding announced in Chancellor George Osborne’s Autumn Statement would cover the first two years of the company’s work, and that she hoped employers would pay for it after that.

But she deflected several other questions about how the organisation would run, and had to defend it after committee chair Graham Stuart pointed out similarities between its remit and that of the existing National Careers Service (NCS).

Martin Doel, AoC chief executive, said: “It is disappointing to hear that Nicky Morgan was not yet able to give further detail on how to tackle failing careers advice.

“We would like to see the establishment of a careers hub in each local area, supported by schools, colleges, universities, local councils, employers and Jobcentre Plus to ensure that everyone has access to the high-quality impartial advice they deserve.

“We hope that the new careers and enterprise company set up by the government will consider our proposal as a means by which all involved can be incentivised to set aside their narrow institutional interest in favour of meeting the needs of young people.”

An AELP spokesperson said: “The probing over how the new company will dovetail with the activities of the NCS has not alleviated our concerns about its creation.

“We would have preferred that England had an integrated all-age service built around the services of the NCS and that the Department for Education’s new investment should have enhanced other existing services.”

During the hearing, Mr Stuart said: “The government announced in its statutory guidance in 2014 that the NCS from October 2014 will expand its offer to schools and colleges.

“The NCS will broker relationships between schools, colleges, local communities and employers. It would appear that from October 1 the very role for the NCS, which it’s being expanded to do, is exactly the role which you now say the new organisation is going to do.”

Ms Morgan said: “They will work in partnership together. The organisations are different. They will work together to deliver that same goal.”

Her performance in front of the committee was later described as “evasive” by member Alex Cunningham.

Speaking at a launch event for a campaign by the National Union of Students (NUS), Unison and the Trades’ Union Congress (TUC) for better careers advice that he hosted in parliament later on Wednesday, he said: “Everyone is united in saying this system is broken. The Secretary of State says she’s listening but we need to make sure she hears as well.”

A key demand of the joint campaign is to ensure access to face-to-face careers advice, as opposed to the online support currently offered by the NCS.

TUC assistant general secretary Paul Nowak said: “Of course online information is important, but when you’re talking about people’s careers, people’s working lives you need to give them more support than just a hyperlink — and we think there needs to be that frontline, face-to-face advice.”

The Further Education Trust for Leadership (Fetl) has announced the four winners in its first wave of fellowship grants to fund research.

Alex Day MBE, Ruth Allen, Tim Ward and Ann Creed will get up to £40,000 each to fund their work.

They will be looking at attitudes to risk in leadership of sixth form colleges, leadership challenges among third sector providers, the impact of leadership on part-time teachers and fostering creative leadership in FE.

Mark Ravenhall, Fetl chief executive, said: “We’re really excited about the chosen research projects. The idea is to pay for the fellows to take time away from their ordinary jobs, so that they have the time to think seriously about future leadership issues in our sector.”

The winning bidders’ identities were unveiled on Tuesday (January 20) at the Institute of Education (IoE), in London, along with their individual research topics.

Fetl, which launched in May with a budget of up to £5.5m left over from the closure of the Learning and Skills Improvement Service, had received 21 applications for fellowships before settling on the four just before Christmas.

They will work part-time on their projects for between three and six months from February.

“The other applications, which were not chosen this time, showed particular concern about how best to deliver the digital curriculum in the wake of the-FE Learning Technology Action Group, employer engagement, governance, developing middle managers, and performance management,” said Mr Ravenhall.

“Half of the applicants were from general FE colleges and others included specialist designated institutions, sixth form colleges, local authority adult learning and independent learning providers.”

Ms Day MBE, director of adult and higher education at Hampshire-based Peter Symonds College, will research attitudes to risk and Ms Allen, group development manager of the Cornwall College Group, will look into creative leadership.

Mr Ward, chief executive of The Learning Curve, a not-for-profit organisation focused on workforce and organisational development in the voluntary and community sector, and chair of the Third Sector Learning Alliance, which supports voluntary, community and social enterprise learning providers, will look at third sector leadership challenges.

Ms Creed, who is currently working as a freelance researcher after completing 18 months as strategic policy officer for the Workers Educational Association in December, will research leadership impact on part-time teachers.

They will work with a university chair in FE leadership at the IoE.

They will also have access to the IoE library, but regular attendance in London will not be necessary and research can be done from home.

Meanwhile, organisations with an interest in FE were also invited in November last year to apply for Fetl grants worth between £10,000 and £100,000, to fund research into sector leadership issues, with entries closing a month later.

Mr Ravenhall said: “More than 50 applications for this funding round were received. Half of organisations applying were learning providers. Other applications were received from membership bodies, think tanks and universities with a strong track record in FE research.”

The names of up to seven chosen organisations are due to be announced next month.

Fetl’s founding president, and former Lewisham College principal, Dame Ruth Silver said: “In this, our first year, we are grateful for the big vote of support [for the fellowships and grants] and the depth of interest in research in the FE and skills sector. We also recognise this has been a first for the sector in approaching a new body with a new focus.”

The next round of applications for fellowships and grants are set to open in April or May.

Main pic: from left; Tim Ward, Ruth Allen, Alex Day and Ann Creed

Tightening purse strings lead to risk-taking interest

With issues of leadership a key theme in FE and skills, FE Week reporter Paul Offord takes a look at the Fetl grant winners and their research. Alex Day features in the first in a series of articles in this and the next three editions.

Running adult and higher education at Peter Symonds College during a period of heavy government funding cuts has sharpened Alex Day’s interest in risk taking.

Mrs Day, who joined the Winchester sixth form college in 1998 and has been its director of adult and higher education for around six years, said her experience of funding issues was the inspiration behind her winning Further Education Trust for Leadership (Fetl) research proposal.

She will be exploring attitudes to risk among sixth form college leaders, particularly in relation to the diversification of income streams.

She will aim to identify barriers to risk-taking and possible interventions that might support planning and reasonable risk calculation when considering diversification.

Mrs Day, who was given an MBE last year for services to education, said: “It is a really interesting subject area and something that is becoming increasingly important for our sector.

“With the funding cuts we’re seeing, providers are having to look at diversifying where they generate income from, for example through providing increased higher education provision, which all involves risk.

“Any business should have a balanced risk portfolio. If you don’t take risks then you can be left behind and leave yourself vulnerable to change.

“You should have some work that is low risk and low return, some that’s high risk and high return and some in between. Prior to 2000, most definitions of risk were negative and concentrated on ‘the dangers’ of a particular action.

“More recently there has been a change where risk is defined as a combination of perceived ‘opportunities’ and ‘threats’. I think they’ve grasped that in business but I’m not sure we have in FE.”

Fetl chief executive Mark Ravenhall said: “Attitudes to risk and educational diversification are really important issues for the whole sector.

“Although Alex’s proposal focuses on
sixth form colleges, it will explore
principles and solutions that will be
useful for all providers.”

Providers have been given assurances that logistics apprenticeships will continue to be certificated after the industry’s Sector Skills Council (SSC) announced it was closing.

More than 30 jobs are thought to be at risk after the board of directors at Skills for Logistics (SfL), one of 18 SSCs in the UK, announced on Tuesday (January 6) that it was closing, and was considering administration.

A spokesperson for the Milton Keynes-based charity said it had happened “due to pressure placed on the business by the trustees of the pension scheme, which SfL joined following its initial set-up in 2003”.

The Federation for Industry Sector Skills and Standards (FISSS) assured providers of apprenticeships certificated by SfL that they would not be affected.

Mark Froud, FISSs managing director, told FE Week: “In the short-term, FISSS will with immediate affect take responsibility for the certification service for apprenticeships in the logistics sector. SfL certificated around 7,000 apprenticeships in the last 12 months.”

He added: “In the long run, we are working with the UK Commission for Employment and Skills [UKCES] and the Department for Business, Innovation and Skills to find a replacement organisation to manage both the issuing authority duties and certification duties. Providers shouldn’t notice any decline in quality or speed of service.”

SfL’s annual accounts in March last year showed it had an income of £3.6m and 34 full-time-equivalent staff. They also showed that as of March 2010 there was a £1.5m black hole in the “defined benefit” pension scheme, established in 2003 with the ITB Pension Funds Open Fund. Three years later that had been reduced by £300,000. SfL had paid more than £200,000 annually towards the deficit in the two years leading up to publication of the accounts.

The SfL spokesperson said: “Like many similar organisations, the significant pension deficit and subsequent on-going recovery payments has placed extreme pressure on a smaller SfL business in a rapidly changing economic environment.

“We have worked hard to exist and be effective over the last two to three years in the ‘new world’ of substantially reduced public funding.

“However, given the reduced activity level in 2015 and obligations to the pension scheme, the board felt it would be better to seek alternative options for the continuing industry skills projects.”

The accounts also revealed SfL received £4m funding from UKCES for 2013-14 and beyond.

A UKCES spokesperson declined to comment on whether it hoped to retrieve any funding.

However, he said: “We are aware the board of SfL has taken the decision to close and is appointing an administrator.

“This is clearly worrying news for staff and their families, and our thoughts are with them. We will wish to work with the administrator and the industry to ensure continuity of work on standards and apprenticeship certification.”

The ITB Pension Funds Open Fund declined to comment.