A major online training provider has put a stop to its loss-making apprenticeship division and turned full focus to skills bootcamps and adult education.

The Skills Network (TSN) has started the process of moving its current apprentices to alternative providers to complete their training.

Chief executive Mark Dawe (pictured) put the decision to pull out of the provision down to the “real challenges” with current funding levels for apprenticeships in sectors like care, which do not cover the true cost of delivery.

TSN moved into the apprenticeships space at the time of the levy reforms in 2017. The provision is a minor part of its business, having recorded fewer than 300 starts in each of the past two years in sectors that also include early years, leadership and management and IT.

FE Week understand that fewer than 30 staff will be impacted by the closure of TSN’s apprenticeships.

Dawe said: “It is a sad, but well-established fact, that there are real challenges with the current level of apprenticeship funding bands.

“We had already suspended starts in care, as we couldn’t continue to guarantee a high quality of provision for this vital sector, with the funding government provides per learner.”

TSN, rated ‘good’ by Ofsted, has long been one of the largest providers of subcontracted provision in further education. Government data shows the provider currently holds 36 separate subcontracting deals with colleges and councils worth over £8.5 million.

The company’s accounts show it enrolled over 25,000 students onto adult education courses last year, which are all delivered online.

TSN has also moved into skills bootcamps – a flagship government scheme worth over half a billion pounds that involves free courses for learners of up to 16 weeks in length, designed to get people quickly trained in areas of key skills shortages.

“Hundreds” of people enrol onto TSN’s bootcamps every month, according to the company, in areas that include care, digital marketing, cyber security and project management.

TSN said this period of “exciting growth” in bootcamps, the company’s online resources and adult education contributed to the “strategic decision” to cease its direct apprenticeship delivery.

A statement from the provider said: “We are very proud of our achievements in the apprenticeship space in which we have helped over 700 apprentices across a variety of sectors over the past five years – but the time is right for us to focus on the increased growth of our core business, maximising the positive difference we can make to learners, businesses, and communities across the UK.”

TSN added that while it will not be providing direct delivery of apprenticeships going forward, the company will “continue to support other providers of apprenticeships through our online learning resources and assessment packages through our platform EQUAL”.

Dawe said: “We are doing everything we can to find alternative roles for the small proportion of TSN staff affected, either within the business or transferring with the apprentices.”

TSN’s accounts for 2022 show turnover of £18.8 million but a loss before tax of £700,000.

The financial statements said the “negative financial impact” for the year was due to “combined cost implications of the return to normality post Covid-19, the wider economic factors and the new strategic activities have”, but added the company “expect these changes to bottom out and improve during 2023 and onwards”.

The government’s end-point assessment organisation (EPAO) register is set to be shut down and merged with the register of apprenticeship training providers (RoATP).

From August 1 the new single register will be called the “apprenticeship providers and assessment register” (APAR).

The move will drop a current requirement on training providers to prove that the employer has itself chosen which organisation should deliver their apprentice’s end-point assessment (EPA), and switch to a default position of the provider choosing the EPAO. Employers can however continue to select the EPAO themselves if they wish.

Under this new system, when an organisation receives recognition for an apprenticeship standard from Ofqual or the Office for Students they will automatically be placed onto APAR.

New EPAOs will still need to create an account on the apprenticeship service to confirm their place on the register, but they will no longer have to undertake two application processes.

Skills and apprenticeships minister Robert Halfon and the Department for Education’s director of apprenticeships Peter Mucklow teased this change during last week’s Federation of Awarding Bodies EPA conference, telling the audience they planned to help cut bureaucracy in EPA, but stopped short of announcing the registers would merge.

‘Welcome any efforts to streamline and reduce bureaucracy’

Announcing the change today, the government said: “From the August 1, 2023, when an organisation receives recognition for a standard from Ofqual or the OfS they will automatically be placed onto the list of approved EPAOs. DfE will merge this list with the ROATP and rename it the ‘apprenticeship providers and assessment register’ (APAR).

“Maintenance of the register will be undertaken automatically through data exchanges between the regulators and the awarding bodies, and we are now developing that process.

“Although DfE are merging RoATP with the new APAR the application process for providers and supporting providers will remain the same.

“Both Ofqual and OfS are fully supportive of these changes and are working alongside DfE to implement them.”

Further information and guidance on both changes for employers, providers and EPAOs will be made “in the next few weeks”.

Tom Bewick, chief executive of the Federation of Awarding Bodies, said: “FAB members welcome any efforts to streamline and reduce bureaucracy associated with apprenticeship delivery and post-16 qualifications reform. Cutting down on the number of different registers is a great place to start.”

The apprenticeships minister should be a joint Department for Education and Treasury role to ensure the policy and financial side of the levy are aligned, a think tank’s director and former special adviser to education ministers has said.

Policy Exchange has also called for the requirement for apprentices to pass GCSE level equivalent maths and English to be abolished, for small and medium-sized employers to be funded for off-the-job training hours for apprentices under 25, and for a quarter of the levy to fund non-apprenticeship training.

Iain Mansfield, Policy Exchange’s head of education who is a former special adviser to three education ministers, published a report that warned the apprenticeship system is not delivering the number of apprenticeships the UK needs – with young people, those from disadvantaged backgrounds and SMEs being hit the hardest.

Endorsed by former education secretaries Nadhim Zahawi, Gavin Williamson and Lord Blunkett, as well as the DfE’s former director of apprenticeships Keith Smith, the report makes several “significant” proposals for reform.

It pointed out that the government’s apprenticeship levy system suffers from both a “lack of transparency and poor understanding about its purposes”, adding that the apprenticeship budget, the money raised by the apprenticeship levy, the amount of money in levy-payers’ accounts and the money actually spent on apprenticeships are “all different things, both in principle and in fact”.

The report claimed that over the last five years, “£4.3 billion was raised by the levy but not spent on apprenticeships, but rather kept by or returned to the Treasury”. To calculate this figure Policy Exchange compared the annual funds raised from apprenticeship levy employer receipts to the spend on the DfE’s annual budget for England. It does not include apprenticeship spending in the other devolved administrations – data that is not published – so the true figure likely to be smaller.

Join up the apprenticeship minister role

Mansfield’s report warned the current situation, in which the minister for apprenticeships – the minister most directly accountable in the eyes of parliament and the public for apprenticeships – has no responsibility for the levy has “hindered reform, by splitting responsibilities and reducing the incentives to deliver change”.

To address this, he said the apprenticeship minister role should be a joint ministerial role between the DfE and Treasury, with responsibility both for apprenticeship policy and the apprenticeship levy.

Spend a quarter of levy funds on non-apprenticeship training

The report also called for the levy to be transformed into an “apprenticeship and skills levy”, with up to 25 per cent of the levy able to be spent on “high quality employer-relevant skills training that relates to occupational standards, studied at a regulated college, university or training provider”.

This should include bootcamps, T Level placements, approved Higher Technical Qualifications and “specified qualifications relevant to the shortage occupation list, as well as pre-employment development for those currently in long-term unemployment”.

Policy Exchange’s report said all employers should also be able to draw down £1,000 for each T Level placement they provide, which would cost the government an additional £50 million annually.

Fund off-the-job training for young apprentices at SMEs

Training providers have long argued that the government’s rules that require an apprentice to spend around a fifth of their time studying off-the-job training is a major barrier for SMEs.

To overcome this, Policy Exchange has recommended the government provides SMEs with a contribution of £2,500 to fund the off-the-job training hours for apprentices under 25, with an additional £500 achievement premium for completion. The think tank estimates that this would cost around £260 million a year.

Develop new contract for employers that could force apprentices to repay training costs

For use “only by employers that wished it”, Policy Exchange said the government should develop a “model apprenticeship contract for employers” who wish to ensure they retain apprentices after completion, to require an apprentice who completed their qualification to continue with the employer for a period of time, or else repay a portion of their training costs.

This would not impact apprentices who did not complete their apprenticeship and use of this contract would be “entirely optional”.

The model contract would be a template that would be of use to employers where concern that apprentices would leave after completion was seen as a barrier to taking on apprentices.

How to increase apprenticeships among young people

The report states that the “rapid and severe” fall off of apprenticeships among young people “must be reversed if we are to increase social mobility”.

To this end, the government should abolish the apprenticeship minimum wage with minimum wages aligned with the national minimum wage for each age group.

The child benefit regulations should then also be amended so that parents of an apprenticeship aged 16 to 19 continue to receive child benefit, as they would if the child was at school or college, while mayoral combined authorities should offer free public transport to all apprentices under 25.

Policy Exchange has also called for 16 to 19 apprentices to be funded through the DfE’s education funding budget instead of the levy, and for an end to the requirement to pass GCSE level equivalent maths and English to complete an apprenticeship as this rule is “limiting opportunity for those who are not academically gifted”.

Read the full report here.