The court ruling that ‘cast a long shadow’ over college VAT

A court ruling that upended a long-held understanding over the VAT status of FE colleges continues to “cast a long shadow” over whether they can claim discounts on large building projects, some four years after it was issued.

The ruling by judges in the Upper Tribunal of the Tax and Chancery Chamber in late 2020 undermined an established government policy that required further education colleges to pay VAT on most of their spending.

Their decision was the conclusion of a complex dispute between Colchester Institute and HMRC over whether the college could reclaim VAT on a £100 million building project dating back to 2008.

The wide-ranging impact of the ruling – which set a precedent for similar cases – appeared to be an unintended outcome of the college’s attempt to reduce its tax bill on building expenses between 2010 and 2014.

It found that Colchester Institute’s education of 16- to 19-year-olds is an “exempt business activity”, meaning it would no longer have the right to discounts on some VAT costs that colleges and other charitable institutions have access to.

But shortly after the ruling was published, HMRC told colleges in a similar position to the Colchester Institute they should effectively ignore it. The tax authority appeared to suggest that it would overcome the ruling through a “new appeal” with another college.

However, four years later a new HMRC appeal is yet to emerge.

FE Week understands there are several other colleges that have lodged appeals against HMRC tax assessments due to similar disputes over how much VAT they owe on large capital projects, although the tax authority has claimed it is unable to confirm how many.

What did the ruling mean?

FE colleges have long called for more favourable rules on VAT, which costs them an estimated £200 million each year.

Before the 2020 ruling, colleges had a “non-business” status under VAT law, meaning they were unable to recover most of the tax they paid but could claim certain “reliefs”, or discounts.

The ruling meant colleges lost the right to reliefs, the most significant being full discounts on VAT for some building projects and five per cent on fuel and power costs.

It also called into question a special rule allowing academies and schools to recover VAT, giving them a bonus over FE colleges.

What happened this year?

Earlier this month a new ruling from the First Tier Tax Tribunal concluded an almost identical VAT dispute between the Colchester Institute and HMRC.

This time, HMRC took the college to court over a disagreement related to tax bill of £123,000 for a slightly later period to the 2020 ruling. According to the ruling, HMRC admitted it had “no basis” for mounting the claim and the judge cut Colchester Institute’s tax bill by about £99,000.

Is this year’s case the ‘new appeal’ HMRC promised?

Whether the new court ruling will result in an appeal to the Upper Tribunal remains unclear.

When asked whether it plans to appeal, an HMRC spokesperson would only say it is “carefully considering” the tribunal’s recent decision.

The college told FE Week: “Colchester Institute does not comment on matters where there is an ongoing legal implication”.

In a briefing on the latest ruling, accountancy giant Deloitte said HMRC chose to challenge Colchester Institute despite appearing to recognise that the outcome was a “foregone conclusion”.

The briefing added: “However, the fact that HMRC pursued the appeal anyway means that it is likely that they will apply for permission to appeal to the Upper Tribunal.

“If so, any decision ultimately in favour of the college may adversely affect the further education sector’s ability to access VAT reliefs, such as the zero rate on the construction of relevant charitable buildings and the reduced rate on supplies of fuel and power.”

The ruling cast a ‘long shadow’ over colleges’ VAT claims

Audrey Fearing, a partner at tax advisory consultancy RSM UK, said the 2020 ruling on Colchester Institute’s tax claim “continues to cast a long shadow” over HMRC’s stance on colleges’ VAT exemptions.

She added that colleges are faced with a “weighing up exercise” between claiming charitable relief in line with HMRC’s policy or following the Colchester Institute in claiming its spending falls “within the scope of the VAT system.”

She said: “What [the recent ruling] means is as of today, FE colleges have a choice; they can either make claims to HMRC and avail themselves of the charitable reliefs that are available, such as construction and building work … or they can treat their income as wholly within the scope of the VAT.

“Colleges have really got to weigh up what the benefit is, if they’ve not got big capital projects coming up then why would you [challenge HMRC]?

Linda Skilbeck, a director at accountancy firm Buzzacott, said the 2020 ruling “called into question” VAT refunds given to colleges and potentially academy schools.

She added: “The consequence has been that a long-held policy of HMRC, that central government funding is outside the scope of VAT, has been undermined.”

Exit interview: Why Robert Halfon quit ‘the best job in government’

The sector was rocked on Tuesday by the sudden resignation of skills, apprenticeships, and higher education minister Robert Halfon.

The lifelong Tolkien fan signed off on fourteen years championing further education, particularly apprenticeships, in parliament invoking the wizard Gandalf: “My time is over: it is no longer my task to set things to rights, nor to help folk to do so. And as for you, my dear friends, you will need no help … among the great you are, and I have no longer any fear at all for any of you.”

Unlike Gandalf though, Halfon has no intention of disappearing across the sea, never to be seen again.

“My first political speech in 2010 was about apprenticeships, and my last political speech – whatever day that may be – will be on apprenticeships and skills. I’m actually determined that’s the case,” Halfon told FE Week the day after resigning.

Politicians often go to great lengths to avoid answering questions about their future career ambitions. But Halfon is clear: “I want to work in education and skills when I leave. I don’t know what that will be, but it’s been my great passion in life.”

Tributes from national FE leaders were uniform in their praise and gratitude when the news broke.

Sue Pember, policy director at Holex, who Halfon described as “a difficult woman to defy”, said his departure from government “will leave a void that will be keenly felt”.

Pember is not alone in attributing the increased political profile of skills and apprenticeships to Halfon’s unapologetic and relentless advocacy from the back and front benches. 

But, for him, his time was up.

“I’ve been thinking about leaving parliament for a few months. I had early discussions with the chief whip earlier in the year, but nothing had been finalised. I also wanted the government and the prime minister to know. But it’s not an easy decision.”

Between now and whenever the general election takes place, he will dedicate his time to his beloved Harlow constituency free from the pressures of ministerial office.

‘I did everything I could’

He won the seat in 2010 from the Labour Party’s Bill Rammell, a former further education minister, on his third attempt, increasing his majority since then from 4,925 to 14,063 in 2019.

In his 14-year stint in the House of Commons, he’s almost always had a parliamentary, party or government job on top of his responsibilities as an MP. He appears enthused about being able to speak his mind without having to conform to government collective responsibility.

“I’ve done this job now for 18 months, and it’s something I’m very proud of. I did everything I could do in the run-up to an election. As a minister, you obviously do work hard in your constituency. You’re not able to do as much as you can, particularly publicly, and there are things I want to do for the people of Harlow before I leave office.

“That’s why I had to make the very tough decision to step down from a job that I love and wanted to do and felt that I was able to hopefully do some good while I was there.”

The 2010 maiden speech in the House of Commons had him call for “root-and-branch cultural change” so apprenticeships are “held in the same regard as higher education by secondary teachers”.

Reforms to the Baker clause, requiring schools to host employers, colleges, and training providers to promote technical education and apprenticeships for “encounters” to their pupils, were led through parliament by Halfon.

Robert Halfon

“One of the reasons why I thought it was okay to go at this time was because a lot of the work that we were doing is on its way,” he said.

The frontbencher has become well-known for his “ladder of opportunity” catchphrase and has been influential over policies including the apprenticeship levy, T Levels, adult education budget devolution, the lifelong learning entitlement and level 3 qualification reforms.

Despite being on the same page as leaders on the importance of FE and training, rifts have emerged over the years on funding. Reviews of apprenticeship funding bands have been “too slow,” some standards are chronically underfunded, teachers are underpaid, and inflation has chipped away at already stretched budgets.

“I did everything I could to get more funding for FE,” he said, highlighting: “To get any penny out of the Treasury is very hard nowadays.”

But he considers funding wins on degree apprenticeships, care leaver bursaries and more recently on SME apprenticeships as some of “the big things” he wanted to see done before stepping down.

Earlier this month, the prime minister announced the government will fully fund the training of younger apprentices in small and medium-sized businesses, adding £60 million to the apprenticeships budget.

“I was over the moon about the £60 million, as you can imagine, for apprenticeships. New money in a very difficult climate. That was on top of £50 million that came last year in the autumn statement for specialised STEM apprenticeships.

“Money is not easy to come by. But I think given what we’ve received from the chancellor, and the removing of the cap on small businesses. I think we’re doing okay. Believe me, I’d love more. But where every single government department wants more spending, I think in my area, at least while I’ve been there, I’ve been proud that we’ve had extra money.”

Halfon said defending adult education, particularly community learning, is another of his achievements.

“I love community learning. The department knew I loved it. I had five priorities for adult education, the first was community learning and to at least keep the budget for that. And we’ve done so. I’ve done everything I can to support it because I really, really believe in it.”

But with economists warning of harsh cuts to come for non-protected department budgets following the government’s recent tax cuts, should the community learning sector be worried now that Halfon won’t be at the negotiating table?

“I think the sector’s got an incredible case to make,” he said.

“What I would do is not just focus on how brilliant it is, but what makes the case is focusing on the outcomes. What is the next step these people take, or how has it improved their mental health and wellbeing? I think that helps when you’re making the case to the Treasury. It really does.”

Political trade-offs

One of the quirks of Halfon’s career is his five-year stint as chair of the education select committee in between spells as the skills minister.

He made a name for himself for interrogating ministers and officials from the chair – which he said suited his personality as a “campaigner at heart”. He was critical of government policy that he would once again find himself responsible for, like the rollout of T Levels and the effectiveness of the Careers and Enterprise Company.

“One thing I did learn is it’s a lot easier to ask the questions than answer them.”

For Halfon trading the ability to freely speak his mind as committee chair with towing the party line as minister was worth it. Returning to the DfE as minister was “a chance to do stuff and really make things happen”.

Funding widening participation projects for degree apprenticeships, increasing the care leaver bursary, and laying the groundwork for the “revolutionary” lifelong learning entitlement wouldn’t have been possible as a committee chair, he asserts.

He spent his last day at DfE with his civil service directors, who he described as “literally outstanding”.

“It was quite emotional for me. I realised I was sitting in a room with great, great people. I’m very grateful to them.”

Mayoral authorities can’t afford new national adult ed funding rates

A large mayoral authority has spurned new national adult education funding rates due to be rolled out next academic year over concerns they will lead to a drop in thousands of learners.

From 2024/25, the government will bring in bumper adult education funding rates through the “adult skills fund” for non-devolved areas of England that will see five new priority bands for subject areas.

However, Greater Manchester Combined Authority (GMCA) estimates that if introduced locally next year, the new national funding rates would result in a 22 per cent drop in the volume of residents accessing courses – equivalent to about 12,000 residents.

Other combined authorities, which have devolved control over their adult education budget, have flagged affordability concerns but expect to use underspends from previous years to cover their costs.

Instead of mirroring the government’s new national funding rates from August 1, GMCA will “continue with an interim methodology for supporting the increasing cost of delivery” through a flat rate increase to individual adult skills funding rates (costs per course) of 6.5 per cent.

The combined authority will also increase grant-funded allocations by 2.2 per cent in 2024/25 to “take into account stagnant levels of funding since the start of devolution”.

For independent providers funded through procured contracts, the funding rate uplifts were “already taken into consideration as part of the procurement process and within their awarded allocation”.

What is GMCA saying?

An update on adult education spending in 2024/25, approved by the Andy Burnham-run authority last week, highlighted the “complex” new rates and “stagnant” levels of funding for GMCA since it took control of its budget in 2019.

The report added: “In recent years GMCA recognised that the cost of delivering adults skills has increased and that in particular the level of funding per course that adult skills providers drawdown, has not increased for ten years.”

Under the government’s new national funding rates, distributed by the Education and Skills Funding Agency (ESFA) to providers in non-devolved areas, high priority subjects such as engineering will see their rates increase by 33 per cent to £3,456.

In contrast, GMCA’s 6.5 per cent increase would bring the local rate for the same course to £2,750 – £700 lower than the national rate.

However, despite suggesting that the government should increase the adult education budget pot – which has remained at about £96 million since 2020/21 – GMCA says it can “absorb” the cost increase using unspent funds from previous years.

In 2022, GMCA had £9 million in “unallocated” adult education funds, reportedly due to falling enrolments during the pandemic. It is also forecasting £98.9 million in financial reserves this year,
although how much of this comes from unspent FE cash is not specified.

A spokesperson for GMCA declined to comment on the differences in local and national funding rates, or the amount of reserves it has available to cover its costs.

The authority – which has the third largest adult education budget – says an across-the-board funding increase for courses is an “interim” approach ahead of gaining increased control over its budget under ongoing “trailblazer” devolution negotiations.

It is hoped that under the future devolution deal, the government will give devolved authorities even more flexibility to spend adult education funding that is currently ringfenced, such as skills bootcamps and free courses for jobs.

Concerns at other combined authorities

Combined authorities that have published adult education spending plans for next year show diverging approaches in different parts of the country, with some following ESFA rates and others offering additional targeted uplifts for specific courses or learners with legal entitlements.

In previous years, some of the ten devolved authorities have avoided across-the-board increases and instead chosen to target funding uplifts at essential skills, English as a second language, or priority subjects such as engineering and manufacturing.

Three authorities that have published their 2024/25 spending plans are following national ESFA rates, but anticipate using unspent funds from previous years to cover cost increases.

In its adult education budget for 2024/25 published this month, Liverpool City Region Combined Authority said it will follow the “welcomed” ESFA rate increases, but warned that they will “in all probability” mean fewer enrolments due to increased costs.

South Yorkshire Mayoral Combined Authority has decided to follow the ESFA’s new rates using £5 million “carried forward” from previous years.

Cambridge and Peterborough Combined Authority claims it is “required” to follow the national rate because it uses the ESFA’s individualised learner record system.

However, it also voiced concerns that although the new rates will increase funding per learner, the number of people able to access courses “will reduce”. To mitigate this, CPCA warned it will need to “potentially draw down” from reserves to cover the costs.

The Greater London Authority, which had a £322 million share of the adult education budget last year – by far the largest share of devolved authorities – is yet to publish detailed funding plans for 2024/25. But earlier this month, its senior adult education team warned that the authority may not have enough funding to meet “increasing demand” in the capital.

As a result, it is likely to reduce the uplifts of previous years “in line with the available budget” and instead target funding towards “essential skills priorities”.

What does the sector think?

LTE Group, which runs several training providers including The Manchester College, has previously warned that devolved skills policy has created “multiple overlapping layers” for providers to negotiate.

Chief executive officer John Thornhill pointed out that in 2022/23, GMCA’s uplift of five per cent was “significantly lower” than to authorities such as the GLA and West Midlands Combined Authority, who increased rates by 13.5 per cent and 10 per cent, respectively.

This risks creating a “postcode lottery” of funding for providers working in different parts of England, Thornhill added.

Alex Stevenson, head of essential and life skills at the Learning and Work Institute, told FE Week that an “inherent problem” in managing adult education spending is the “pot that’s fixed”.

He added: “You’ve got the choice of having more learners on shorter, smaller or less well-resourced courses, or fewer learners doing more substantial programmes with more resources.

“Everyone has got to make decisions somewhere about those trade-offs.”

IfATE slated for apprenticeship assessment reform confusion

The Institute for Apprenticeships and Technical Education has been slated for sneaking out multiple reforms to apprenticeship assessment rules without consultation.

IfATE’s ‘developing an end-point assessment plan’ guidance was quietly updated last week and appeared to remove the requirement for end-point assessment to assess every knowledge, skill and behaviour (KSB) involved in an assessment plan.

It also suggested that officials have moved from requiring a “minimum” of two assessment methods to a maximum of two.

EPAOs were left frustrated with what appeared to be sudden and significant changes especially after then-skills minister Robert Halfon told the sector that officials will “improve the assessment model”, in his letter about this year’s national apprenticeship achievement rates. 

But there was radio silence from IfATE on the reasons behind the changes, which experts say would have “significant” financial and resourcing implications, or in-depth detail on how the institute expects them to be delivered.

The institute updated the guidance yet again this Thursday after angry EPAOs and the Federation of Awarding Bodies flagged their concern. 

IfATE has now claimed that it is “not moving from a minimum of two assessment methods to a maximum of two assessment methods”. Instead, the institute is “making it clear that trailblazers should justify the requirement for more than two methods for new standards and standards under review”.

The institute also confusingly said it was “not changing our direction on which KSBs should be assessed at this time” and is “committed to working with stakeholders on whether the system should be optimised in this regard.”

Terry Fennell, chief executive of food specialist awarding body and end-point assessment organisation FDQ, said: “It is incredibly frustrating when policymakers change the rules for EPAs without prior consultation with the delivery sector. 

“This tinkering with methodologies and KSB principles has significant financial and resourcing implications for EPAOs working in a now regulated market where consistency, validity and compliance are critical for public confidence in the EPA product.

“Whilst I do appreciate the time is probably right to review certain aspects of EPA, surely it would be better to work with the EPAO market and seek our expertise as part of an improvement exercise. 

“I would also ask for any consultation to be conducted in an open and transparent way ensuring employers and apprentices have their say as in our experience satisfaction is actually very high.”

EPA specialist and consultant Jacqui Molkenthin added: “The confusion is expounded by IfATE’s failure to highlight what the changes are, it simply overwrites its existing web text. It should adopt the DfE approach of issuing a ‘summary of changes’ document when it updates key policies.”

IfATE admitted to FE Week that it “felt the guidance we provided last week was not clear enough”, which led to a further update on Thursday.

A spokesperson said: “We are looking at our approach to the number of assessment methods used in plans and whether the sampling of KSBs would maintain validity whilst improving proportionality.

“We intend to explore these issues with stakeholders, including EPAOs. The primary motivation is to improve the performance and experience of EPA for the benefit of employers and apprentices.”

Any changes are expected to only apply to new standards or those going through a revision process.

Charlotte Bosworth, chief executive of large EPAO Innovate Awarding, said looking at the amount of assessment methods used and the way KSBs are assessed, whether in full or in part via sampling, are “all areas that should be looked at and reviewed as the EPA market matures”.

But she added the government needs to ensure any changes to assessment plans are applied consistently across all EPAOs and different approaches are not being taken that are “damaging to the quality of apprenticeships, risk regulatory compliance, and are damaging to end point assessment outcomes”.

Kion Ahadi, chief executive of the Federation of Awarding Bodies, said: “It is unfortunate that guidance was updated without it being clear on the rationale for changing the guidance on the number of assessment methods and moving to a sampling approach for some KSBs.

“We all welcome positive change to make independent EPA as efficient and as high quality as possible, but we need to ensure this is communicated appropriately and that the EPAO sector is consulted and inputs into any future proposals.”

The PM’s apprenticeship reforms are a drop in the ocean

Last week, the Prime Minister announced a package of reforms to unlock a “tidal wave of opportunity” for UK apprenticeships. This included an additional £60 million, which he claims will provide up to 20,000 more apprenticeships. Sadly, this amounts not to a tidal wave but to a drop in the ocean.

The new reforms are somehow meant to work such wonders by funding college fees for small businesses. But the reality is that non-levy paying employers only pay 5 per cent of these fees as it is, amounting to a maximum of £450 – this is not the barrier to generating apprenticeships. And even if results materialise, 20,000 new apprenticeships across all sectors won’t even touch the sides when construction alone needs more than that.

This is about far more than educational opportunities for young people. This is about the foundation of our country’s social and economic fabric. The Prime Minister is not living in the real world if he genuinely believes these reforms are up to the job.

CITB forecasts the need for 225,000 extra construction workers by 2027 to achieve the government’s own house-building target of 300,000 new homes a year. This equates to 45,000 people joining the industry annually. And that’s not to mention our crumbling infrastructure, with maintenance backlogs across the public estate. But with just 26,100 people going into construction apprenticeships in the year to July 2022 – and a 50 per cent drop-out rate – it is likely we will continue to fall short.

The crux of the construction skills gap is that apprenticeships rely on employment in a largely self-employed industry. What we need is for government to simplify the process to incentivise smaller businesses and one-person-bands to take on apprentices.

Instead, the government talks about lifting 132,000 SMEs out of the levy and funding their apprentices’ college fees. But the levy itself is a broken, backwards system that requires us to hire apprentices to get our investment back. And it’s only one of two in construction, where we also pay a CITB levy.

The bedrock of our economic growth is in a dire situation

In the past, the government would fund all apprentices’ college education, while industry would pay salaries (c. £14,000 per year for each apprentice). Now we are left paying for both. It is for this reason we’ve seen contractors halve their apprentice intake. Short sighted, perhaps, but this is the reality. Meanwhile those like Seddon, who continue to invest in people, endure the additional cost.

One of the most common challenges the sector faces is the geographical spread of construction sites. Coordinating the correct work experience to suit the apprentice’s geographical location is highly complex, can lead to high levels of inactivity, and costs employers more than an apprentice’s salary.

This is particularly hard for smaller businesses and one-person bands who represent 79 per cent of the industry, a quarter of whose workers consider themselves to be neurodiverse. Unsurprisingly, just 18 per cent of these businesses choose to take on the administrative burden of employing apprentices. 

This is not helped by how specialised our industry has become. Apprentices aren’t able to reach the apprenticeship standard working within the apprenticeship programme, which is why we have such high drop-out rates. Apprenticeship standards are generally set by larger organisations with the capacity to offer a wider scope of experience. The problem is that they simply don’t employ the numbers required.

Collectively, the smaller companies do, but are excluded from the decision making. The solution is either meaningful work experience like T Levels offer across all trades, or a change in the standard, allowing apprenticeships in specialist areas.

Employment is the issue here, not interest from young people. There is no shortage of people from a range of backgrounds who wish to start their career in construction. The industry is now in the top 10 desirable jobs for teenagers. Last year, we had 480 quality applicants for 17 roles.

The Prime Minister’s lacklustre reforms and vague promise of £60 million won’t do anything to bridge that gap, meet targets or put our infrastructure right. A tax incentive or government grant to help fund employment like we saw during Covid might, but these must be linked to completions, not starts.

Our sector is the bedrock of economic growth and it is in a dire situation. This government or the next one will have to grasp the nettle – and quick.

Why faith is a cornerstone of effective EDI work

As a Chaplaincy coordinator in the FE space, I often stress that faith has a much broader base than religious belief. It is about deeply held values and convictions that guide us all in our personal and professional lives rather than about specific religions.

I have been working with staff and students at London South East Colleges for over ten years now, helping them embrace faith-based perspectives. I believe this is essential when it comes to creating an inclusive and supporting learning environment for all. It also provides a counterbalance to what can be a challenging level of discourse in the 24-hour news cycle and digital space.

Tensions between faith and EDI (Equity, Diversity, and Inclusion) may arise due to conflicting beliefs on gender roles, LGBTQ+ rights, and religious freedoms. For instance, accommodating religious attire may conflict with dress codes promoting gender equality. 

Muslim students may need extra time to pray, and timetables can sometimes make this challenging. Balancing these concerns requires tact, grace and respectful dialogue, while fostering an inclusive environment for all beliefs.

But despite these perhaps inevitable tensions, faith can serve as a cornerstone for fostering EDI within educational institutions. Research has shown that students who feel a sense of belonging and connection to their school or college community are more likely to thrive academically and socially.

A study by the University of Cambridge found that schools that actively promote an inclusive ethos based on shared values and beliefs, including faith-based values, have higher levels of student engagement and achievement. 

Embracing faith cultivates empathy, tolerance and respect

Furthermore, embracing faith in education cultivates empathy, tolerance and respect for diverse perspectives. In a multicultural society like ours, where students come from various cultural, religious, and socio-economic backgrounds, incorporating faith-based principles into the curriculum helps students develop a deeper understanding and appreciation of different belief systems. This in turn fosters a rich culture of mutual respect and understanding.

As staff working at the coalface in FE, I believe that there are several ways we can implement effective changes that promote faith-based inclusion in education. Here are a few things that you can do:

Promote dialogue

Encourage open and respectful discussions about faith and belief systems in the classroom. Create a safe space where students feel comfortable sharing their perspectives and experiences.   For example, initiate small group discussions where students are prompted to share how their beliefs influence their decision-making process. This can helps students recognise the commonalities between faiths.

Integrate faith-based values

Incorporate compassion, integrity and social justice into teaching practices and policies. These values provide a framework for ethical decision-making and moral development among students. For instance, we can draw parallels between religious teachings on compassion and the importance of advocating for marginalised communities. This enhances students’ understanding of the subject matter, while reinforcing the relevance of faith-based values in addressing contemporary challenges.

Celebrate diversity

Organise events that celebrate cultural and religious diversity. For example, hosting an interfaith panel discussion where representatives from different religious backgrounds share how their faith informs their approach to social justice issues, can be incredibly enlightening for staff and students.

Provide support

Offer pastoral care and support services that cater to the spiritual and emotional needs of students from diverse faith backgrounds. Ensure that students have access to resources and guidance that align with their beliefs and values.

To effectively implement these ideas, it’s important to actively listen to staff and students as well as evaluating the effectiveness of any initiative. As is the case with wellbeing, you need to take care of your own wellbeing if you are to support other people with theirs. This is the same with faith; we must nourish our own faith if we are to grow as individuals and as an organisation.

I believe that faith, in all its forms, can help keep us balanced and centred in our role to inspire others, especially if we embrace faith-based values including Compassion, Integrity, Empathy, Mindfulness, Community Service and Interfaith Dialogue.

By incorporating these practices into our daily delivery, we can create a nurturing, inclusive environment where every student matters feels valued, respected, and empowered to succeed.

Apprentice minimum wage should be linked to age, says Low Pay Commission

The apprentice minimum wage should be raised for over 18s to narrow the pay gap between apprentices and other workers, an independent advisory body has suggested.

The Low Pay Commission (LPC) began considering abolishing the apprentice minimum wage in November after hearing “widespread” concern that the “low” rate was discouraging people from taking apprenticeships.

In new advice published on Wednesday, the commission said the wage should be kept but that the government should link the rate to the national minimum wage for over 18s during the first year of their apprenticeship.

That means that the gap between the national minimum wage for adult apprentices and non-apprentices would be reduced (see table).

LPC’s ‘National Minimum Wage beyond 2024’ report said: “Government should consider the case for reforming the apprentice rate to a simple discount of the minimum wage that applies for that age group during their first year and ask us to take this forward in a future remit. For apprentices aged 16 and 17, the rate should remain aligned with the 16- to 17-year-old rate.”

The commission has not concluded what the discount should be exactly but a “reasonable” starting point would be to set the apprentice rate at 75 to 90 per cent of the adult national minimum wage.

From April 1, 18 to 20-year-old workers will earn at least £8.60 per hour and 18 to 20-year-old apprentices will earn £6.40 per hour – a 21 per cent rise from last year.

The commission is suggesting that with a 25 per cent discount of the new 18 to 20-year-old rate, apprentices over 18 could earn £7.74 per hour.

The body explained that it was not advising to remove the rate entirely because it “would remove alternative ‘shelter’ for young people’s employment.” 

“Large changes to the youth and apprentice rates at the same time could be a significant shock to the youth labour market,” the report said.

The Low Pay Commission also proposed lowering the age of eligibility for the national living wage “one age group at a time and to reduce the gap between the youth rates and the adult rate where the evidence allows”.

One small business owner in Manchester told the body of the large jumps in rates when employees turned 21 and came off the apprentice rate, which “could be a significant cost shock”.

“If the government agrees to our recommendation to, over time, lower the gap between the youth and adult rates and lower the age of eligibility to the national living wage further, then we think the current structure of the apprentice rate should also change,” the commission said.

“We would propose that, for apprentices aged 18 and over, the apprentice rate changes to a simple discount of the national minimum wage age rate during the apprentice’s first year.

“This, combined with the lowering of the age for national living wage eligibility, will result in substantial increases in the wage floor for apprentices, but continue to recognise the additional costs relating to the substantial training they receive.”

Baroness Philippa Stroud, chair of the Low Pay Commission, said: “There are real opportunities in the next phase of minimum wage policy, to make advances for workers young and old. Whatever decisions are made will always need to be backed by careful attention to the economic context and a keen sense of the risks faced by employers. The Low Pay Commission’s model remains the best one for delivering these changes.”

The government usually announces minimum wage rates in November for the following April.

Quality achievement rates create inequalities by design

Despite high drop-out rates across many sectors, it’s universally acknowledged that the goal of any apprenticeship is for a learner to complete their programme successfully and attain the qualification they set out to achieve. However, quality achievement rates (QARs) are of themselves a blunt tool to assess the provider’s role in that process, whether it is successful or not.

The recent release of the 2022/23 apprenticeship qualification achievement rates (QAR) data has highlighted significant disparities, particularly within the service sector. This raises concerns about the sector, but it raises just as many about whether the accountability system truly reflects the realities of apprenticeship delivery.

QARs are crucial for gauging apprenticeship program performance, but it’s essential to recognise that while they serve as a performance metric for education providers, they should not be the sole measure. The Apprenticeship Accountability Framework offers a more comprehensive evaluation by considering additional factors such as sector comparisons, as well as employer and apprentice feedback.

It’s true that the application of QARs in sectors like hospitality and retail reveals inherent inequalities. But the high turnover rates and the part-time, flexible nature of jobs mean that QARs do not accurately measure either the inherent nature of work in these sectors or the quality of training that takes place.

Apprentices often encounter unique challenges, including a highly competitive working environment, irregular working hours and the need to balance work with other commitments. These factors directly impact on completion rates. Recognising partial achievement would be a better indicator of apprenticeship achievement, and therefore provider performance.

Moreover, the current individualised learner records (ILR) destination codes and stagnant funding bands since 2017 do not align with the realities of apprentices’ journeys. The hospitality sector in particular faces a higher likelihood of businesses going into receivership, and SMEs are experiencing increased redundancies due to external pressures like the cost-of-living crisis. These factors underscore the importance of updating destination codes to better reflect the outcomes of apprenticeships.

QAR should not be given such precedence in assessing training quality

Furthermore, it’s crucial to understand that an apprentice leaving their apprenticeship early may not inherently reflect the quality of training provided. The QAR measuring tool may imply that leaving early is negative, but there are numerous reasons why an apprentice might not complete their programme that are completely unrelated to the quality of the training that has been received – some of which are positive.

These can include personal circumstances and career changes but just as often they can be the result of a promotion or other early employment opportunities. These positive reasons for leaving an apprenticeship early are often directly attributable to the skills that the apprentice has gained or demonstrated in the course of their apprenticeship. They may also reflect employers’ keenness to ‘lock in’ talent when they see it.

What this means is that the QAR should not be given such precedence when looking at measures of training quality, and therefore the performance of a training provider.

The consistent and deliberate under-spending of the apprenticeship levy by government has restricted the ability of the sector to invest in innovative ways to deliver training. Coupled with no general funding increase across most funding bands for apprenticeships we now see severe financial challenges for training providers, especially where specialised training facilities and infrastructure are required.

In addition to not funding apprenticeship delivery adequately, the system also leaves large levy-paying employers contributing to a scheme that may not adequately fund the apprenticeships in sectors with specific needs.

So while QARs are a valuable tool for assessing apprenticeship programs, there needs to be a far more nuanced approach to holding providers accountable for their part in the process. And at the heart of any new approach must be consideration of the unique circumstances of each sector. This applies to hospitality and retail, but we know it applies to others too.

To begin with, policy makers must address the limitations of current funding structures and review destination codes. Doing so will be a crucial first step towards providing a fair and accurate representation of apprenticeship quality and outcomes.

‘Consultation not referendum’: Oliver defends Ofsted’s ‘Big Listen’

Ofsted’s “Big Listen” is a “consultation” not a “referendum”, chief inspector Sir Martyn Oliver has said, as he defended the exercise following criticism from unions.

In a letter to National Association of Head Teachers general secretary Paul Whiteman, seen by FE Week, Oliver said he wanted to “dispel” the concern that data from the consultation “will be interpreted by Ofsted as a mandate to avoid change”.

Ofsted launched the “Big Listen” – a 12-week consultation on further inspection changes following the death of headteacher Ruth Perry – earlier this month.

Whiteman wrote to Oliver today to express “significant concerns”. 

The primary issue is “many of the aspects of the current approach to inspection that our members are most concerned about are not addressed through the sections of the survey that will produce quantitative data”, he said.

The “most obvious example” is the lack of a “direct or clear question” about the use of single-phrase judgments to describe school and college performance.

“Whilst there are free text boxes provided, our concern is this will only provide qualitative information, which could get easily lost or overlooked in comparison with the far easier to present results derived from the multiple-choice questions.”

‘Significant challenge’ over single-phrase judgments

Oliver acknowledged Ofsted had received “significant challenge on whether we were right or not to have a question on single-word judgments”. 

In a letter that again shows the watchdog has moved on from its previous closed shop approach, he added: “The absence of a specific question in the consultation does not mean we are not listening to feedback from your members – and others – on the issue of single-word judgments. 

“One respondent is so determined to use the available text boxes to ensure we hear the message that they have included ‘GET RID OF THE ONE WORD JUDGMENTS’ as their gender, sexuality and religion, for example.”

Oliver also aadded that he interpreted “that there is a concern that data from the consultation, for example general support for giving a clear judgment on the quality of education, will be interpreted by Ofsted as a mandate to avoid change”.

But he added: “I want to categorically dispel that view. The consultation, alongside the independent research and the wider engagement we are conducting as part of the Big Listen, is a starting point for real action and improvement at Ofsted. 

“We will use the full range of feedback and research to inform how we improve, which we will set out in our response to the Big Listen.”

‘Missed opportunities’

In his letter, Whiteman also described other “missed opportunities to really understand what respondents think about key issues relating to inspection”.

For example, the questions on notice periods “have been drafted in an extremely vague manner, whereas there was an opportunity to directly ask something far more precise such as ‘how much notice should a school / setting be given before an inspection is carried out?’.”

The NAHT also has “significant concerns about the way some questions have been designed and framed”, and feels questions are “leading”.

“More importantly, respondents are not being asked how effective the current approach to inspection is at measuring these things, or about the very different forms a ‘clear judgment’ could take.”

But Oliver insisted that the Big Listen is “first and foremost a listening exercise”. 

“I don’t want to give the impression that we are conducting a referendum instead of a consultation. We are not naïve about the likely sample of respondents to our consultation. 

“We know any ‘vote’ would not be representative of the views of all those we want to hear from. That said, we genuinely want to gather views on all matters relating to our work, from a broad church of respondents, which is why having an open consultation is so important.”