Broker offering subcontracting deal for ‘completed’ 16-18 sport trainees

A learner find firm is attempting to broker a subcontracting deal for 16 to 18-year-old trainees who have already completed their placement at football clubs.

Prime providers that take up the offer from Develop Your Staff (DYS) would break government funding rules, according to an auditor.

An email from DYS, sent to providers with direct access to funding, asks: “Do you have any underspend on your 16-18 traineeship funding contract which needs spending?”

Of the five unnamed providers looking for access to funds, one of them “delivers sport traineeships and delivers nationally, great links with football clubs and fantastic success data”.

“They also [have] 65 unfunded learners based around London, all completed. Their prime ran out of funding so they were unable to process.”

Another is “seeking around £30,000 for their unfunded learners, they are based in Yorkshire and deliver sports and construction and in addition to the £30,000 they require, they would be looking at enrolling an additional 15 candidates per month”.

DYS’ hunt comes amid a consultation on radical Education and Skills Funding Agency rule changes. It states that “entering into subcontracting arrangements for financial gain” is not acceptable.

The consultation includes a dedicated section on subcontracting of sport related provision, as it is an area that the ESFA is “particularly concerned” about.

“While we recognise that it [subcontracted sports provision] provides access for some learners who might otherwise be disengaged, there have been cases where weaknesses in oversight arrangements have given cause for concern,” the ESFA has said.

“Problems have arisen as there is generally also a sports club involved as a third party in the programme which may provide specialist coaching, and the boundaries between the funded education programme and the associated coaching activities become blurred.”

Just last month FE Week revealed how a different training provider was offering a reward of just under £30,000 for simply adding their data on achieved learners to a government funding claim.

Existing ESFA ‘funding and performance management rules’ state that it is “vital” that all directly funded organisations must “properly monitor and control all subcontracted delivery”.

While DYS would not itself be in breach of any government funding guidelines, an experienced individual learner record auditor, who did not wish to be named, told FE Week that any provider who entered into a subcontracting arrangement after learners had already competed their traineeships would be breaking the funding rules.

Danny Scargill, the managing director of DYS, would not provide the names of the providers he is trying to broker subcontracts for, but he insisted the ESFA extract quoted by FE Week is “simply part of the commentary: it is not a rule”.

He said: “The providers we are working with, certainly in relation to our post, are not directly funded. We are simply helping to coordinate supply with demand.

“It is not a breach of the rules for any providers to use consultants to help accelerate their funding spend, certainly when there are critical situations or unexpected issues.

“A couple of the providers advertised have unfunded learners, learners who could ultimately be disadvantaged due to the providers losing funding from their primes. We have stepped in to help them with our large network of clients. I am sure you would agree that this not something that should be criticised.”

Scargill added: “We provide a particularly beneficial service in this sector. When a training provider loses funding, learners are always the people that suffer. They are left in limbo and are often unable to complete qualifications that they have started. This should not happen and, in some circumstances, we can help those learners by finding alternative funding streams that would otherwise be unavailable to their training providers.

“The funding allocation system that is currently in place is not perfect but we are helping to perfect it. With our assistance (and similar from other brokers) the market for learners continues to increase and learners have a safety net where their provider loses funding.”

DYS’ website states that it has “no upfront fees for our telemarketing service”…“we simply charge a fixed fee per candidate found”.

Scargill would not reveal how much his firm makes from placing each learner with a provider.

Struggling Gateshead delays annual accounts as auditors conclude investigation

A college has delayed signing off on its 2018/19 accounts as forensic investigators shed light on its unexpected £6 million deficit for the first time.

Independent auditors were drafted into Gateshead College late last year after the shock shortfall was discovered.

Principal Judith Doyle and chair John McCabe have since left their positions.

While full details on the cause of the deficit are still not known, the college has confirmed that the investigation has now concluded.

A spokesperson told FE Week: “The forensic investigation instigated by the board established that the financial position is not as the board understood it to be at the start of July last year because the income position was overstated and the expenditure was substantially understated.

“This meant the college’s projected out-turn and the 19/20 budget were inaccurate.”

They stressed that the report “does not suggest that there has been any misappropriation of college funds”.

FE Commissioner Richard Atkins intervened at Gateshead College when the shortfall was first revealed. His report will be published “in due course”.

In the meantime, the college’s accounts have been delayed. They are expected to be finalised by the end of March or early April, the spokesperson said.

Experienced FE leader Andy Cole was appointed as Gateshead College’s interim principal in February following the resignation of Judith Doyle – who was the highest paid college leader in 2017/18.

He told FE Week: “In the short time I have been here I can see that this is a vibrant college providing excellent education, training and outcomes for its students and fulfilling an important role in the regional economy.

“We need to do all we can to maintain this by implementing a swift and effective recovery plan to restore the college’s financial health in the shortest possible time and I’m working closely with the board, the executive team, wider college staff and the relevant stakeholders to make sure that this happens.”

John Hogg, a former deputy FE commissioner, was drafted in to replace McCabe – who commissioned the independent audit into the deficit – as chair in January.

Shortly before Cole came onboard, Gateshead College launched a redundancy consultation and put 26 jobs at risk to help “address some short-term financial pressures the college is facing at the moment”.

Ofsted then downgraded the college from ‘outstanding’ to ‘requires improvement’.

Inspectors said the information leaders provided to governors about the college’s finances over recent months had “not been sufficiently accurate to enable governors to hold leaders to account for the management of resources and the college’s significant financial deficit”.

Gateshead College received a financial notice to improve from the Education and Skills Funding Agency in January after it had “been assessed as experiencing serious cash flow pressures”. The college is currently in formal intervention.

A new three-year financial plan has since been agreed on, and it is hoped to return Gateshead College to surplus by 2020-2021.

It recorded a surplus of £748,000 in 2017-18, according to its latest accounts.

BMet sells Stourbridge campus for just £3.55m

A college campus that was controversially closed last summer has been sold for £3.55 million, just five years after £5 million was spent on a refurbishment.

The news comes as published accounts for Birmingham Metropolitan College also reveal property revaluations have contributed to a £23.7 million deficit last year.

The college told FE Week that it has now exchanged contracts for its site in Stourbridge with boarding school Old Swinford Hospital.

A spokesperson for the college said they are “satisfied that we achieved best value”, despite the sale price being £1.45 million less than the makeover costs in 2015.

The Stourbridge sale, which triggered strong local opposition including from MP Margot James, was decided on by BMet as it bid to pay back debts which had totalled £8.9 million to the banks and £7.5 million to the Education and Skills Funding Agency by May 2019.

The group’s recently published 2018/19 accounts show that it generated a deficit of £23.7 million in 2018/19. However, £18.6 million of this was owing to “impairment loss” of its assets.

A BMet spokesperson explained that the “value of the assets on the college’s balance sheet relates to historic value associated with a collection of assets that does not reflect the current market value.

“In layman’s terms the college has not had any cash loss because of impairing assets – it’s all book loss.”

The spokesperson said that overall, BMet is making “significant strides in reducing its level of debt and in 2018/19 the college reduced its operating deficit by half” – from £6.251 million in 2018 to £3.323 million in 2019. 

“In 2018/19 the college continued to monitor against its financial recovery plan with an aim to return to good financial health,” they added.

Stourbridge College, which dates back over 100 years and joined BMet in 2013, was closed following a review by the FE Commissioner.

Its 900 learners were transferred to Dudley and Halesowen colleges, and some staff were also absorbed by the two colleges in September 2019.

BMet’s accounts show that it received a combined £2.4 million from Dudley and Halesowen for the transaction.

In addition, BMet is expecting to receive a further £500,000 from Dudley associated with the disposal of its Arts and Design Centre.

Despite closing down the Stourbridge site to balance its books, the accounts state that the net proceeds from the sale will be used to “invest in the future” of BMet’s James Watt campus.

It will also go some way to “further reduce” its £8.9 million debt with Lloyds Bank.

While BMet’s accounts have been signed off as a “going concern”, its auditors said there was a “material uncertainty”.

“The college is dependent on the continued support of its bankers for the continued provision of loan facilities and the Education and Skills Funding Agency for short term cashflow support,” they state.

“These events and conditions indicate that a material uncertainty exists that may cast significant doubt on the college’s ability to continue as a going concern.”

Old Swinford Hospital is a £12,000 a year state boarding school founded in 1667.

Negotiations to buy the Stourbridge site from BMet got underway in October, following heightened concern that it could become housing.

The school teaches students from years 7 to 13, where parents pay for boarding at an annual cost of £11,940. The DfE pays for the tuition.

UK colleges remain open in Coronavirus ‘delay’ phase as France and Ireland set to close

Closing schools and colleges at this stage in the spread of the coronavirus epidemic could do “more harm than good”, Boris Johnson has warned.

On Thursday the prime minister reiterated advice that education settings “should only close if they are specifically advised to do so”.

It comes after the government’s emergency COBRA committee agreed to move from the “contain” to the “delay” phase of its response to the pandemic.

However, the government is advising colleges to call off any international trips with students under the age of 18 they have planned.

Sir Patrick Vallance, the government’s chief scientific adviser, said that while it’s “true that there’s some effect in closing schools” the effect is “minimal”.

“Actually, you’d have to do it for 13 to 16 weeks or longer, and you don’t have to be a very advanced mathematician to work out that the chances of keeping children not speaking to each other or playing with each other over 13 to 16 weeks is zero,” he said.

“Therefore, you have to be very careful to make sure you take the right measures that will stop this, rather than things that might end up with children, for example, going to stay with grandparents at a time when they might be most vulnerable.”

Dr Chris Whitty, the chief medical officer, also said it was important to “do the right things at the right time. This is going to be a long haul. It’s critical we do not start things in advance of need.”

The move to the “delay” phase of the government’s response comes after the number of cases in the UK rose to over 450.

It was warned earlier this month that this phase of the government’s plans could include school and college closures. France and the Republic of Ireland announced earlier this week that all of its schools and colleges would close. Italy, Japan and parts of China made similar decisions earlier this month.

The Association of Colleges has issued guidance for its members.

“The Department for Education have confirmed that we have now moved into the delay phase in an attempt to manage the Coronavirus outbreak. As it stands, colleges will stay open,” it says.

“For AoC that means, until further notice, all our events, sports’ fixtures, network meetings, Policy Group meetings, and any other meetings required in the normal provision of our services, will proceed as planned.

“If staff have self-isolated, or tested positive, then of course they will not participate in any of these activities.

“If you have a confirmed case within your college visit https://www.gov.uk/health-protection-team. They will assist in next steps, including helping to organise a deep clean of the college. This is not for suspected cases, for confirmed cases only.

“Keep checking official Public Health England guidance for up-to-date info, advice and guidance.

“We will of course inform staff, colleges and partners immediately if this position changes. Until then, it’s business as usual.”

On Monday, the government announced it will allow apprentices to have a “break in learning” if they cannot be assessed due to the coronavirus.

You can read the government’s guidance for education settings here.

Minister promises ‘significant funding’ in ‘coming year’ for SME apprenticeships, claims AELP

New skills minister Gillian Keegan has pledged “significant funding” for additional small business apprenticeships in the “coming year”, the Association of Employment and Learning Providers has claimed.

It comes a day after the Treasury confirmed to FE Week that Rishi Sunak’s budget did not include any new cash for apprenticeships despite the accompanying red book document stating that “government will ensure that sufficient funding is made available in 2020-21”.

AELP chief executive Mark Dawe says he has since met with officials in both the Treasury and Department for Education, and they have promised that fresh funding is coming.

“Immediately after the budget, AELP had confirmed in person by the Treasury, the apprenticeships and skills minister and senior DfE officials that there will be significant funding for additional SMEs’ apprenticeships for the coming year and in the spending review,” his newsletter to members said today.

“We have to trust that this is the case given where I have got the commitment from and, therefore, celebrate that AELP’s call for support for SMEs has been listened to and is one of the few new announcements of extra money in the skills system.

“I have agreed to meet with the Treasury again in the near future to further discuss this and other matters.”

Dawe added: “Having had almost an hour and a half with the minister today, what I can confirm is she is a massive champion for worked based learning, apprenticeships and the range of work that the ITPs do, as long as it is quality and demonstrates benefit to the learner and employer.

“But we have to be robust, demonstrate the quality of what we do at all levels and in all sectors.”

No figures for how much this extra funding will total have been revealed so far.

Both the DfE and Treasury have told FE Week that no decisions on the spending review have been made yet.

The AELP has repeatedly warned that levy shortages meant small to medium enterprises were being cut out of apprenticeship funding.

In January, new boss of the Institute for Apprenticeships and Technical Education, Jennifer Coupland, called for an additional £750 million to prop-up small business apprenticeships.

When making her plea she said the levy has led to small businesses cutting their training by ten per cent, while levy-payers have increased theirs by 20 per cent.

She added that the £750 million would cover the cost for about 85,000 apprenticeships which non-levy payers cannot fund.

New DfE data released today found that small and medium sized employers, those with fewer than 250 staff fell over 100,000 (42 per cent reduction), compared to a rise of over 16,000 for large employers (8 per cent rise).

The IfATE first projected that the apprenticeships budget would soon be overspent in 2018. The National Audit Office has since also warned that current funding for apprenticeships is unsustainable.

Treasury pours cold water on hopes for extra SME apprenticeship funding

Hopes for new apprenticeship funding have been swiftly crushed after the Treasury confirmed that today’s budget offers no extra cash for the programmes.

In January, new boss of the Institute for Apprenticeships and Technical Education, Jennifer Coupland, called for an additional £750 million to prop-up small business apprenticeships.

And optimism for the funding was raised this afternoon when chancellor Rishi Sunak’s budget document said: “The government will ensure that sufficient funding is made available in 2020-21 to support an increase in the number of new high-quality apprenticeships in small and medium-sized businesses.”

It prompted Association of Employment and Learning Providers chief executive Mark Dawe to say: “At last! After months of persistent lobbying the government has taken a significant step today to fulfilling the prime minister’s promise last summer that apprenticeships should be properly funded.”

But a Treasury spokesperson has since told FE Week there will not be any new funding coming from them.

He made clear that the “sufficient funding” for 2020-21 would be in comparison to 2019/20, and it is affordable within the Department for Education’s 2019 spending round settlement.

The spokesperson said the majority of the funding is being made available through an extension to non-levy contracts until the end of October, to support SMEs transition to the digital apprenticeship service, as previously announced by the DfE.

The DfE confirmed last month that all apprenticeship starts will be managed through the digital apprenticeship service from 1 November 2020.

Only larger employers with an annual total pay bill of over £3 million who pay the apprenticeship levy can currently draw down funding for an unlimited number of starts from the online service.

The long-awaited transition for SMEs began in January, but small employers have been capped initially and can only make reservations for up to three apprenticeship starts.

Today’s budget document states that the government will “look at how to improve the working of the apprenticeship levy” in the build up to this year’s spending review, to support large and small employers in “meeting the long-term skills needs of the economy”.

When making her plea for extra apprenticeships funding, Coupland said the levy has led to small businesses cutting their training by ten per cent, while levy-payers have increased theirs by 20 per cent.

The extra £750 million requested would cover the cost for about 85,000 apprenticeships which non-levy payers cannot fund, she told the Financial Times.

The IfATE first projected that the apprenticeships budget would soon be overspent in 2018. The National Audit Office has since also warned that current funding for apprenticeships is unsustainable.

Budget DOES include manifesto promise of extra £4bn of FE funding in England

The chancellor has confirmed the Conservative manifesto commitments for FE, including a £1.5 billion boost to upgrade college buildings and a new £2.5 billion National Skills Fund for England.

Rishi Sunak’s budget has also promised the government will “ensure that sufficient funding is made available in 2020-21 to support an increase in the number of new high-quality apprenticeships in small- and medium-sized businesses”.

However, the Treasury has since confirmed that it will not actually be providing any new funding for apprenticeships (full story here).

The college capital spend rises to £1.8 billion and the skills fund reaches £3 billion over fives year when including the indicative “Barnett consequentials” for Scotland, Wales and Northern Ireland.

While there was no brand new money for FE in today’s budget, hopes are high for more cash in the upcoming spending review. Sunak said he has launched this process today, and it will “conclude” by July.

During his speech the chancellor said: “I would like to take the opportunity to pay tribute to my predecessor [Sajid Javid] and friend the right honourable member for Bromsgrove.

“One of the issues he is most passionate about is leveling up further education. At the spending round he increased funding for 16-19 education by £400 million.

“Today I can secure his legacy with £1.5 billion of new capital over five years to dramatically improve the condition of our entire FE college estate. My predecessor wanted to level up further education. Saj, we’re getting it done.”

In Sunak’s budget document it states that the capital investment “will ensure that colleges have cutting-edge facilities to train people for jobs in the industries of the future, and is part of the government’s plan to upgrade the nation’s infrastructure”.

It also said the government will “consult widely in the spring” on how to target the National Skills Fund “most effectively, before confirming details at the spending review”.

The budget document states that the government will “now look at how to improve the working of the apprenticeship levy”, to support large and small employers in “meeting the long-term skills needs of the economy”.

The government said it will also provide an additional £7 million to support a total of 11 maths schools for young people aged 16 to 19 in England, covering every region.

And, as previously announced, eight new Institutes of Technology will be launched with £120 million.

For T-levels, the budget document confirmed that £95 million will be offered to providers in England to “invest in high quality facilities and industry-standard equipment to support the rollout” of the qualification launching from autumn 2021.

Association of Colleges chief executive, David Hughes, said: “Today showed a clear shift in attitude towards technical and vocational education, after a decade of neglect.

“Colleges will be keen to access the £1.5 billion capital funding and will want to shape the new National Skills Fund to make sure it works for their communities and for the people and employers they support.

“To create a truly transformative post-16 education system the comprehensive spending review later this year must commit to long-term investment ensuring no one is left behind.”

Bill Watkin, chief executive of the Sixth Form Colleges Association, said: “We were expecting a stripped down budget focused on manifesto commitments and that is what we got today.

“All roads now lead to the autumn spending review, where the government must seize the opportunity to secure an improved, long term settlement that will benefit all students.”

My notes ahead of select committee session on the apprenticeship levy

The education select committee held their first session yesterday with what it called a “discussion around the complexity of the levy, its impact on smaller businesses (non-levy payers) and the use of the levy to fund higher level apprenticeships”.

You can watch the session here.

As one of the witnesses, I prepared some analysis and notes ahead of the session. In the spirit of sharing is caring, I’m publishing them here in the hope they may be useful.

Q1. How did the introduction of the apprenticeship levy in 2017 affect employers in different industries?

An excellent question that is very difficult to answer (anecdotal evidence is of little to no value) in the absence of data on apprentice industry characteristics since May 2017. The DfE did publish “experimental” data on “apprenticeships in England by industry sector” (click here) in October 2018, but this only goes up to 2016/17, before the levy was introduced. The DfE said they planned to publish more up-to-date data in October 2019, but delayed this “to enable analysis looking at the impact of the introduction of the apprenticeship levy on employers engaging with apprenticeships, as well as including data from the 2018 to 2019 academic year”. The DfE will now publish this data at 09:30 tomorrow (12 March 2019).

Here’s the data from 2016/17, and with the 2.3 per cent public sector starts target, I would expect to see significant growth in that sector.

More generally, I can say as an analyst of apprenticeships data for more than a decade, the level of transparency since the introduction of the levy has significantly fallen. Beyond starts and achievements, there is now very little financial data published at all in terms of provider or employer funding. This is something the committee may wish to challenge both the Treasury and DfE on – as it makes impact and policy assessments very difficult.

Q2. Why was there a large fall in apprenticeship starts after the introduction of the levy?

It is important to understand that the £2 billion+ levy tax income was just replacing £1.5 billion the Treasury was putting in – so it was not the introduction of the levy that caused a fall in starts. 

The very predictable fall is starts was actually caused (mainly) by six changes the Education and Skills Funding Agency made relating to funding rates, rules and provider registers that came in at same time as levy in May 2017.

We know this was predicted as there was a rush in starts before these changes were applied from May 2017. There were 134,000 starts in March/April 2017 (two months before the changes) compared to 79,000 the year before, which in May/June 2019 (two months after the changes) dropped to 27,000 (74,000 the year before).

The six changes that meant a drop in starts was very predictable:

  1. Framework rate changes. From 1 May starts on all frameworks switched from a sophisticated formula to a very low ‘cap’ rate, such as £2,000 for business admin, reported by FE Week at the time. Some late changes were made to include some disadvantage funding and an uplift for 16/18s (who were particularly hit by switching to a single cap) – but still much lower rates than before, and rates for standards often more than double. Providers were telling FE Week that many of these made their programmes unviable – so they stopped delivering starts.
  2. Mandatory fee for first time. From 1 May employers had to either pay 10 per cent (now 5 per cent) or use their levy funding (if they had any), even for 16-18s. Before then, many paid nothing at all (despite the fact the government had a 50 per cent assumed fee for those aged 19 and over). Clearly many walked away when they had to pay. The annual cost of halving the co-investment to 5 per cent is £60 to 70 million annually, according to the Treasury. This is probably one of biggest factors in the fall in starts.
  3. Subcontracting tightened up. From 1 May starts, under a new rule, all main providers (such as colleges) had to deliver a significant number of apprenticeships to the employer alongside the subcontractor. FE Week estimates this cut subcontracting in half to about £150 million.
  4. Wave 1 applications to register of apprenticeship providers. Many providers, such as colleges in Birmingham, were initially hampered by not getting on the register early on.
  5. Botched non-levy tender with £200,000 minimum. First attempted scrapped. Second attempt was announced in December 2017 for contracts from January 2018 (so late) and some big successful providers, like Exeter College, failed to win a contract at all. The £200,000 minimum stopped many (such as universities) from being allocated anything as the ESFA reduced bids by as much as 67 per cent (in London). North East Employment & Training Agency Ltd, a provider which has been running for 30 years and is rated ‘good’ by Ofsted, bid for just over £300,000, a tender which was “realistic based on our current levels of delivery”, according to its managing director Stephen Briganti. He told FE Week his tender was successful but the pro-rata awarding process saw any potential award fall below the £200,000 minimum requirement and the “end result of this is that we are being offered nothing”.
  6. Switch from frameworks to standards. From high volume, shorter and lower funding value frameworks to low volume, longer and high value standards – hence average funding for starts more than double forecast, according to a National Audit Office report. But standards were initially slow to come on stream. A total of 533 standards are now approved for delivery with another 154 in development.

Since then, starts have not fully recovered (23 per cent down), particularly at level 2 (for all age groups) which is 51 per cent down on the year before the levy was introduced. In terms of a priority area, the number of 16-18 starts remains 26 per cent down. The growth at level 4 and above has been driven by… a) the introduction of standards at that level and… b) a new and very significant rule from May 2017 that people with degrees (no limit on level of prior attainment) can be funded for apprenticeships.

Q3. How have the government’s recent reforms, such as the increased flexibility for levy-payers to be able to transfer up to 25 per cent of their funds, affected employers?

The policy to allow levy-paying employers to transfer up to 10 per cent per year was introduced a year into the levy to help large employers spend their funds and support smaller employers. With less than 0.5 per cent used this way, Anne Milton questioned at the Conservative Party conference in October 2018 if it was “too small to make it worthwhile”.

Take-up remains slow despite increasing the transfer maximum to 25 per cent in April 2019. DfE figures from February 2020 show that just 870 (0.5 per cent ) starts were funded via levy transfer out of 162,000 levy-supported standards for 2018/19. However, the DfE also report uptake has increased to 1,500 starts funded via a transfer in recent months.

The challenge is that it is a high administrative burden for the levy-paying employer because funds can only be transferred once an apprentice has been enrolled and the risk remains with the levy-paying employer. The ESFA is, however, aware of the risk to public funds (fraud) with this type of transfer ‘market’. Anne Milton said at a fringe event in October 2018: “We have to have rules, and they’re irritating and bureaucratic, but fraud has been an issue.”

The West Midlands Combined Authority has big businesses investing in an “apprenticeship levy transfer fund”, which they hope will collect up to £40 million. This was part of a “£69 million skills deal agreed with the government in summer 2018 – the first of its kind in the country”. It “means the large employers donate a portion of their unspent apprenticeship levy funds to the smaller companies, covering 100 per cent of their apprenticeship training and assessment costs”.

Q4. What changes could be made to the levy to ensure it is easier for businesses to upskill their workforce?

Some thoughts, on basis the Treasury (despite making a £1.5 billion saving per year by replacing apprenticeship spending by the levy) won’t pump extra money in nor see it as politically possible to lower the £3 million threshold, nor increase the 0.5 per cent levy rate:

  • The money is not there to widen what it can pay for. In fact, right now “hard choices” need to be made to stop paying for everything at on average double the forecast rates (see the NAO report from last year and evidence from the DfE’s permanent secretary to the education select committee). Start with being honest that it is public money and it can’t pay for everything. Failure to do that will clearly result in a big row when inevitable restrictions kick in. Would providers prefer prioritising funds or the Institute for Apprenticeships and Technical Education (IfATE) making rates for standards so low they are unviable?
  • Prioritise the young (ring-fence the funds again – which was around £600 million before May 2017) and those entering the job market by fully-funding them, it was bonkers to charge employers for 16-18s, as I’m sure Professor Alison Wolf, now in Number 10 policy Unit, would agree. Employers should pay a significant contribution for existing employees, and should pay for all 25+ existing employees without subsidy. Many of the training programmes for existing employees should either be paid for by the Office for Students via a loan, or via alternative routes (such as the planned National Skills Fund).
  • Give employers a better product and more confidence in the providers by improving the quality assurance oversight – starting with Ofsted taking on all the level 6+ provision and Ofqual taking on the full external quality assurance role.
  • Give back apprenticeship funding rate responsibility to the ESFA and scrap concept of the negotiated rate – that has failed (nearly all providers charging 100 per cent and they are confused by funding rule requirements to reflect prior learning and experience in the price). IfATE represents employers so how can they be best placed for setting rates for the use of public money – how is that independent?
  • General financial and quality oversight and clarity of responsibilities between DfE, ESFA, IfATE, Ofsted, Ofqual, QAA and OfS is a mess and is letting apprentices down.
  • Scrap the 10 per cent levy top-up (that’s around £200 million per year) and charge SMEs a lot more for existing employees. It is madness to be subsidising training for existing employees on £100,000+ that already have degrees by 95 per cent.
  • Consider implications of reducing the 24 month sun-setting period on the levy (originally it was meant to be 18 months).
  • Try not to change too much about the wiring as the system is bedding in.

Some other issues and analysis that may be of interest:

  1. Framework rates very, very low as we switch to expensive standards
  • There are still 155 different frameworks still in use at different levels according to quarter one 2019/20 starts, making up 26 per cent of all starts 
  • But all frameworks will be switched off for new starts by 31 July 2019
  • Framework caps set very low. E.g. the level 2 accounting framework has a cap of just £2,000 (plus £1,400 extra for 16-18s) with 474 starts, of which 237 (50 per cent) are 16-18 of which 199 (84 per cent) are at FE colleges. Yet the level 2 accounts / finance assistant standard has a cap of £6,000 (plus £1,000 extra for 16-18s) and had 76 starts in three months.
  • The level 3 accounting framework has a £2,000 cap with just 117 starts in last 3 months. The level 3 assistant accountant standard has a cap of £8,000 with 1,747 starts in three months
  • Level 3 business admin framework is set at £2,500 (plus £1,500 for 16-18s) and had 558 starts (239, 43 per cent, colleges). The level 3 business admin standard is £5,000 (plus £1,000 for 16-18s) with 3,735 starts (958, 26 per cent, colleges).
  • As at today there are 533 available standards and a further 154 in official development (making a total of 687). See table below.
  • Even many level 2 standards can have very high rates, like the carpentry and joinery programmes at £12,000 or the land-based service engineer at £15,000.

2. FE colleges look particularly vulnerable as they have delivered just 30 per cent of starts from August to October 2019, of which 40 per cent are still on the old frameworks and 58 per cent are with non-levy employers (SMEs).

3. Unspent funds shows policy is working (government planned for around 50 per cent), because if levy employers used it all there would be £0 for small employers, English and math, incentive payments etc.

For 2018-19 there was £1.7 billion of £2.3 billion levy spent, leaving £489 million underspend on apprenticeship budget (a budget that had been set in 2015). Non-levy funding was around £500 million (30 per cent) and levy paying employers spent around 30 per cent of what was in their account. FE Week reported in April 2019 that of the £489 million the Treasury took back “just over £300 million”. The £2.5 billion budget for 2019-20 and “final end-of-year out-turns will be published in the 2019-20 annual report and accounts”, says the DfE. 

4. The DfE do not like talking about it, but it is clear funding is now running out as cheap frameworks are being replaced by the expensive standards

NAO report, March 2019: “The average cost of training an apprentice on a standard is around double what was expected, making it more likely that the programme will overspend in future”…“employers are developing and choosing more expensive standards at higher levels than was expected. The Department has calculated that the average cost of training an apprentice on a standard at the end of 2017-18 was around £9,000 – approximately double the cost allowed for when budgets were set.”

ESFA annual report, July 2019 : Increased demand for apprenticeship funding in future years has the potential to place pressures on funding provided by the apprenticeship levy. Budget pressures will be explored through the Spending Review process.”

5. Current trends increasingly showing young people losing out

This is the DfE analysts’ description of the first quarter of this year: “Starts by under 19s have seen a fall of 11.2 per cent from 2018/19. In contrast, starts by those age 19 and over fell by just 1.3 per cent and there has been a small rise for those aged 25 and over of 1.2 per cent. Since 2017/18, starts by adults (19+) have grown by over a quarter (25.6 per cent), while those for under 19s have fallen by 12.8 per cent. The 25 and over group have seen an increase of 44.8 per cent over this period.”

6. A third of apprentices fail to finish their course, and this is set to get even worse with frameworks moving to standards

Look out for the 2018/19 national achievement rate tables (NARTs), due for publication on 26 March. We’re expecting to see a massive 10 percentage point drop in achievement rates, which the DfE is very concerned about.

6. The controversial MBA apprenticeship is being reviewed after Gavin Williamson wrote to the IfATE to say: “I am committed to maintaining an employer-led system, but I’m not convinced the levy should be used to pay for staff, who are often already highly qualified and highly paid, to receive an MBA.

“I’d rather see funding helping to kick-start careers or level up skills and opportunities. That’s why I’ve asked for a review of the senior leader apprenticeship standard to ensure it is meeting its aims.”

There were close to 1,500 starts on this £18,000 standard in a single month (September 2019) – which could have paid for over 10,000 16-18 places.

But there are many other management standards that should also be reviewed through the lens of kick-starting careers, including the £22,000 level 6 chartered manager (645 starts in September), the level 5 manager (1,408 starts in September) and the level 3 team leader (2,290 starts in September).

Also, should many others at level 7 be publicly funded as apprenticeship – given some look like universities simply cashing-in? Such as the £9,000 university professor apprenticeship (academic professional).

The IfATE’s wesbite states that “115 universities and other higher education providers across the country are committed to recruiting academic professional apprentices” and the expected uptake of this programme is “approximately 2,000 new starters per annum”. So 2,000 starts x £9,000 = £18 million.

The IfATE’s website adds: “Academic professionals work within the higher education sector delivering higher education teaching and undertaking research to support the development of knowledge within their discipline”…“Employers will set their own entry requirements, which will usually be a postgraduate degree level (level 7) qualification in an area of disciplinary specialism.”

The end-point-assessment is simply a one-hour presentation.

Also, FE Week revealed in April 2019 that plans for PhD-level apprenticeships had been thrown into doubt after the IfATE raised concerns they were not in the “spirit” of the programme. But we understand it is back on track and in January 2020 the institute said: “The proposal for a level 8 clinical academic professional standard has been approved for development following consultation with the Department for Education.”

There are currently three Level 8 apprenticeships in development – which – it seems – is being pushed through by the DfE regardless of IfATE concerns.

 

I’ve hit 2,500 words, so that’s all for now!

Email me your thoughts: nick.linford@lsect.com

 

 

 

 

Revealed: DfE finds small employers now account for just 27% of apprenticeship starts

The Department for Education has this morning published “analysis looking at the impact of the introduction of the apprenticeship levy on employers engaging with apprenticeships”.

The analysts found: “Apprenticeship starts have become more concentrated in large employers, since the introduction of the levy.

“Apprenticeship starts were most likely to occur in large employers (those with 250 or more employees) at 61 percent of all starts in 2018/19; however, this proportion rose from 46 percent of all apprenticeship starts in 2016/17.

“Small (0-49) employers accounted for 27 percent of apprenticeship starts in 2018/19, falling from 37 percent in 2016/17.”

The DfE first published this “experimental” data on “apprenticeships in England by industry sector” (click here) in October 2018, but with no data from after the levy was introduced for starts in May 2017.

The plan had been to publish more up-to-date data in October 2019, but this was delayed until today, in order to “include data from the 2018 to 2019 academic year”. 

Today’s data follows repeated warnings from the Association of Employment and Learning Providers that levy shortages meant small to medium enterprises were being cut out of apprenticeship funding.

In January, new boss of the Institute for Apprenticeships and Technical Education, Jennifer Coupland, called for an additional £750 million to prop-up small business apprenticeships.

When making her plea she said the levy has led to small businesses cutting their training by ten per cent, while levy-payers have increased theirs by 20 per cent.

She added that the £750 million would cover the cost for about 85,000 apprenticeships which non-levy payers cannot fund.

But the Treasury has poured cold water on hopes for new funding, after they confirmed that yesterday’s budget offers no extra cash for the programmes.

There is still optimism, however, that more funding will be made available in this year’s spending review.