The non-levy procurement pause will be “a slaughter of providers”

Mark Dawe, chief executive of the Association of Employment and Learning Providers, calls for immediate government action to alleviate the pending “horror story” facing providers of apprenticeships with non-levy employers

The day the non-levy procurement pause was announced, I remarked to colleagues how appropriate it was that it was Maundy Thursday – the day of the Last Supper, when Peter was told of his three acts of denial.

No, the pause isn’t aimed at stopping subcontractors getting a contract; no (after a lot of lobbying,) the new subcontracting rules won’t apply during the pause; and no, this allocation is not designed to destroy the subcontracting market. Three denials, it’s but starting to get a little suspicious.

As things stand, over the next week we will witness something equivalent to a horror movie: “the slaughter of providers, part one”.

It wasn’t me who lit the bonfire of the providers

I have been accused of inappropriately fanning the flames, but it wasn’t me who lit the bonfire of the providers. As I explained, I am just reflecting the heat I am feeling from AELP members.  That’s my job.

So what is the problem? As levy business starts next week, there are many positive aspects about the apprenticeship policy and levy-paying employers, and many providers are very excited.

But let’s be very clear, it’s only the few thousand-odd levy-paying employers we are talking about here. They make up, as the government keeps reminding us, just two per cent of the employer market.

The horror story emerges in the non-levy world. For those involved, it feels like we are stumbling towards the edge of a precipice, and if the government doesn’t act in the next few days, there will be no return this time.

The allocations announced this week to prime providers, with a handful of exceptions, appear to be a fraction of what providers require to maintain their current run rate, i.e. apprenticeship starts and apprentices already on a programme.

Some providers will run out of money within weeks.

Closures and redundancies will start next week

When the government paused the process, it said it wanted to “achieve the right balance between stability of supply and promoting competition and choice for employers”. This latest decision has tipped the scales towards total instability.

The funding agency might argue that it has given opportunities to the primes to put in a business case for more money and tat they will receive results in July.

However the current reduction in allocation makes it impossible for providers to plan working on the basis of no guarantee of future funding and limited trust in the system.

But worse, subcontractors are being contacted by their primes, often with great regret, hour by hour, and told that there isn’t enough money to support them, so they won’t have any funded starts from May 1.

Closures and redundancies will start next week; come July many of these providers won’t exist anymore and the RoATP will shrink rapidly.

I really don’t think the government understands the seriousness of the situation. I have provided officials some examples, and have many, many more that underline the dire position we are in.

Many officials have voiced their concern about the capacity and readiness of the system and particularly providers.

Have they ever tried to develop a business which only has funding for six weeks? It’s not as if the funding can be claimed without an apprenticeship being delivered – we are not talking grant funding – and I thought the government wanted more apprenticeships, not less.

Without immediate action and additional money allocated, the government will have managed to destroy capacity and the consequences for non-levy businesses, employees and learners will be dire.

Our concerns of “apprenticeship deserts” will become a reality across the nation’s constituencies.

While AELP continues the fight at the centre, for many of their members and local provider networks, the only option is to talk to local MPs and prospective parliamentary candidates about the consequences of this approach.

If the government genuinely cares about delivery to SMEs and social mobility, it will act today. If the government genuinely cares about robust apprenticeships and skills policy to underpin its industrial strategy, it will act today. If this isn’t just an underhand way of wiping out subcontracting, the government will enhance allocations today.

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  1. Very interesting in a case of ‘be careful what you wish for’. A few days ago, AELP’s major ITP membership were smiling thinking that they had got the cream and the smaller providers would just have to whistle for funding. No so any longer. This affects the larger providers. I sense because AoC haven’t responded that perhaps College’s are less affected due to grant funding and to safeguard the capital and recovery investments made by Government to them. With the introduction of Universities into the Apprenticeship mix, has provided the Government with the solution of reducing ITPs and driving recognisable institutional quality.

    I can’t help thinking that the whole Levy aspect has been under valued by our sector. The principle point being missed is that the Government, specifically the Treasury, needed to save money. By creating the Levy, it effectively reduced the public purse amount. The Treasury didn’t see the Levy as additional funding for the skills sector, just a saving whilst keeping roughly the same amount of money in the sector = neutral balance. So whilst our sector planned to expand provision via over performing with Levy payers (dipping into the non-Levy pot), it made the Government very nervous. I believe this was sufficient concern and a contributor as to why the Government agreed to pause the ITT allocation e.g. let’s see what happens, not because of lobbying by AeLP. However, the effect of the pause didn’t really matter, because the effect would be the same at any date – there would be no new money. Once the Levy went live, Treasury would expect to reduce public funding and make the Departmental saving expected in the time agreed.
    We are now seeing that being played out.

    To avoid the catastrophe, rapid consideration will be required in the following area:
    Government solutions could be for SMEs to:
    Pay more than the 10% contribution
    Reduce the £3M threshold to £2M or less, capturing more employers
    All pay a Levy contribution

    Whatever the plans are (they will have already been formulated, but not yet published), the Government would ideally apply these after the election. The consideration to act would depend on the level of risk right now to voters?