Consultation Response on Funding Reform for Apprenticeships in England

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1 Consultation Response on Funding Reform for Apprenticeships in England October 2013

2 Introduction The Institute for Learning (IfL) is the independent professional body for teaching and training professionals in the further education and skills sector. Our membership includes tens of thousands of vocational trainers, work based assessors, supervisors, teachers, tutors and lecturers across the skills system who join IfL, as their professional body, out of a shared commitment to professionalism and excellence in the delivery of teaching and training. We are pleased to be able to provide a response to the joint consultation between the Department for Education and the Department for Business Innovation and Skills on reforms to funding system for apprenticeships in England. The document comes at a time when apprenticeships are at the top of the agenda in achieving a highly skilled and competitive economy. At the same time, apprenticeships are at the forefront in creating a vocational pathway for young people and adults that is as well respected and recognised by society and employers as other vocational and academic routes through compulsory, further and higher education. The prominence given to apprenticeships is welcomed by IfL and our members. Apprenticeships are more than programmes of vocational work based training. They are programmes of education and occupational learning offering breadth and led by trained and qualified vocational teachers and trainers. These principles IfL believes should be at the heart of any reforms to apprenticeships be that the funding system, curriculum, accountability and qualification reform. It is in this spirit that true gold standard apprenticeships can be promoted to provide maximum opportunities for young people, adults and all employers. These are the characteristics of international gold standard apprenticeships to which we aspire. In turn, IfL wants to see local communities, as well as our national economy, thrive with the benefits that come with a population that is engaged in learning. Crucial to this are highly trained, qualified and respected professional teaching and training practitioners who also are vocational specialists as they ensure apprenticeships are high quality and that young and adult apprentices learn most effectively and efficiently. 2

3 This response from the Institute for Learning (IfL) has been informed by the following guiding principles for reform of the apprenticeship funding system in England: Universal excellence in the quality of teaching and training, including having trained and qualified teachers and trainers, creates conditions for optimum retention, achievement, progression and efficiency in the apprenticeships system Quality should drive quantity in making apprenticeships attractive Apprenticeships are programmes of learning and should be seen as giving wider educational outcomes as well as occupational expertise Skills shortage areas, opportunities for young people and progression can be incentivized through the funding system Equality of opportunity for all learners. 3

4 Consultation Questions The case for funding reform 1. Would businesses be prepared to pay more for Apprenticeship training in return for greater influence over its content and delivery? Apprentices and businesses have a right expect the highest quality on- and off-the-job teaching and training. This means training that is relevant to the immediate and future needs of the business and more broadly the industry, and the immediate and future needs of the apprentice themselves. It is IfL s position that every employer and apprentice should have access to apprenticeship programmes that meet their training and wider educational needs. As such, there is a role for government to ensure that there is an equal playing field in terms of the influence and control that employers have over the content and delivery of apprenticeship programmes between large, medium, small and micro sized businesses. This, in turn, provides for consistent standards of quality across all apprenticeships and a strong apprenticeships brand. IfL does not speak for businesses, so others are best placed to provide insights in to whether businesses will be willing to pay more in return for greater influence over content and delivery. 2. What would be the impact of greater co-investment on businesses decisions to recruit and train Apprenticeships? And on how businesses deliver Apprenticeship training and deal with training providers? Levels, and indeed, definitions, of co-investment already differ across the apprenticeships sector by businesses and learners themselves such as through an entitlement (16-18 year olds), a 24+ advanced learning loan or full cost. 4

5 IfL believes that the opportunities that vocational education and training, including apprenticeships, offer to young people leaving school should be presented and discussed on an equal footing to more traditional academic routes. This not only requires a high quality information, advice and guidance service for young people in schools, but also requires opportunities to be available to young people when they leave school. Recent declines in the number of apprenticeship opportunities for year olds is a major concern and the government should seek to address this through these funding reforms. One way in which this could be achieved would be to specifically incentivise the recruitment and training of year olds through apprenticeships or traineeships through, for example, a trainee or apprentice premium. Such an incentive would be in addition to a combination of the funding models that have been proposed in this consultation. Training providers could be funded to develop and deliver the apprenticeship framework and the employer could also receive funding through a direct grant as an incentive to recruit and train a young person, particularly in SMEs and micro businesses at a premium rate for 16 to 18s. A similar model with a premium payment could be adapted for adult apprentices to recruit in particular local shortage areas, for example in engineering, to help drive growth again especially for SMEs and micro businesses. Local Enterprise Partnerships (LEPs) would have a key role to play in defining local labour market intelligence and setting local immediate and projected skills needs. Incentive models through a targeted premium rate such as these could also apply to other programmes which provide access and progression routes including for supported internships, traineeships as well as apprenticeships in shortage areas and offer the kinds of skills and financial support that SMEs and micro businesses need. 3. What are the main advantages and disadvantages of placing government funding in the hands of employers, rather than paying it directly to training providers? 4. Would businesses be willing to negotiate the price of training with providers, and what would help them to do this? 5

6 In considering these proposals, IfL believes that a one size fits all approach when considering the needs of employers is not appropriate. Providing the right funding system which benefits SMEs and micro businesses should be the priority for these reforms. In a system where government funding for apprenticeships goes directly to employers, there would be an expectation that employers will need to navigate their way around a market of education and training providers in order to procure the best deal for them. There is a real risk that there could be a race to the bottom in terms of quality if the lowest price becomes a driver. Locally, this could result in a two tier skills system whereby there would be providers that focused on winning larger contracts at the expense of putting together competitive offers to smaller businesses. In order to effectively tender for provision of training for their apprentice under this system, the employer would have to produce detailed specifications including skills needs, qualification requirements, levels of training, a knowledge of the qualifications and credit framework, basic and functional skills requirements. Large employers would be much more likely to be able to navigate this process more successfully than smaller ones. Large employers will be more likely to have existing relationships with colleges and training providers and are more likely to have the resources and HR functions to be able to invest more in identifying their skills needs and navigating local education and training markets. Small, medium and micro businesses however are more likely to find navigating and getting the most out of this market more challenging, if not impossible with time, money and capacity they have available, not least the upfront resource that this would require. Therefore, whilst agreeing fully with the need for a simplified funding system, consideration must be given to the needs and potential challenges faced by those smaller employers with whom we want more apprenticeship opportunities created. Under a model where the bulk of government funding for the training of apprenticeships goes to the college or learning provider, the college or learning provider carries most of the risk should an apprentice leave. If all funding flows directly from government to employers, the risk is then theirs which could act a barrier to taking on apprentices. 6

7 5. Would the funding principles outlined here raise the quality of training, and its relevance and responsiveness to businesses needs? Why? Why not? This is the most important question in this consultation. IfL is pleased to see that the quality of the apprenticeship and the quality of training is not seen as separate to the apprenticeship funding system. Quality should drive quantity. The government is absolutely right to pursue funding reforms that will enable continuing improvement of apprenticeships, and we believe having trained and qualified teachers and trainers and ongoing developments in the quality of teaching and learning within apprenticeships has to be integral to the funding model that government pursues. Taking each of the principles given in the consultation in turn: The provider is the customer as a principle in this consultation on funding is problematic for reasons given on the very same page of the consultation document itself. The consultation document makes the correct assertion that, apprenticeships are a joint investment and details how individuals, employers and the government each in their own way invest and benefit from apprenticeships. In this sense, there is not one single customer. Employers do though have a strong role, and indeed a responsibility, to work with the college or training provider that best suits the needs of their business and the need for apprentices to have excellent quality apprenticeship programmes. Efforts can be made to make apprentices and employers more informed customers with their purchasing power, which doesn t have to mean cash. Employers and apprentices should be able to easily access information on the quality of a training provider s provision, the number of trained and qualified teachers and trainers, retention and achievement information and employer satisfaction measures as examples. National data on learner satisfaction in further education, such as through FE Choices or Ofsted Learner View is generally poor when compared the data available to potential higher education students through the National Student Survey. 7

8 The employer co-invests. It is widely acknowledged that we need more employers recruiting, training and employing apprentices. That is why IfL has suggested that this opportunity to reform the apprenticeship funding system could be used to develop a system that impacts positively in meeting the needs of SMEs and micro-businesses, and that incentivises apprenticeships and those in skills shortage area through targeted premium rate funding. As co-investors, potential apprentices themselves should have access to high quality information in order to ensure that the programme they are also investing in meets their progression and career aspirations. Government does not set the price of training. This guiding principle is also problematic for reasons similar to those we have already given. The withdrawal of government of control of the price of training, aside of course from when a government cash contribution is made, indicates a move to stimulate local education and training markets. But for these markets to be successful, apprentices, potential apprentices and all employers as potential customers will need access to information that will enable them to make informed choices. IfL is not yet convinced that freeing up local markets in this way at this time will have the impacts that the government desires. What would be considered market failure and what powers the government would retain to intervene are as yet unclear. More fundamentally, IfL is seriously concerned about the possibility that the best provision locally will be reserved for those employers that can afford to pay over and above the maximum rate paid by government, thereby pricing out SMEs and micro-businesses. This would seriously damage our chances of increasing apprenticeship opportunities for young people and adults. Payment on results. As IfL favours a combination of direct provider and employer funding, payment on results is something that we cautiously support as it is a system which will be familiar to colleges and training providers. However, we would hope that this was factored in 8

9 to the negotiating process between employers and providers so that as much resource as possible can be directed towards the delivery of outstanding teaching and training. Providers could ultimately be better equipped to take the risk under a payment by results system. So, for example, if an apprentice is made redundant, the provider can use its partnerships to find alternative employment so the apprentice can continue. IfL believes that the financial risks and burdens placed on employers should be as minimal as possible, particularly on small, micro and medium sized businesses. 6. What would be the impact of these funding principles on the experience and future prospects of Apprentices? One of the main ways in which the proposed funding principles could benefit the experience and future prospects of apprentices is by more resource, through co-investment between themselves, employers and providers, going in to the quality of teaching and training. Evidence shows that engaging and inspiring teaching and training improves retention, attainment, achievement and progression. These proposals would also require a significant improvement in the information that employers and apprentices have about providers in their area in order to inform where they will co-invest. This is positive because it provides a transparency that should, in theory, improve standards of teaching and training and value for money. Equality of opportunity would be a valuable principle for the government to consider in reforming funding and wider issues in apprenticeships. Apprenticeships are a big part of a wider social and cultural agenda in ensuring that vocational and academic education share equal status and respect in our society. Inequalities in the opportunities available, or that are not available, to some learners over others undermine that aspiration. We would expect that any changes made to the funding system as a result of this consultation will be monitored against equality impact measures, Model 1: Direct Payment Model 9

10 7. What are the advantages and disadvantages of providing government support for Apprenticeships in this way? 8. How should this system be designed to ensure it is easy to engage with - for employers and training providers? IfL feels that this model, by itself, would benefit employers with the experience and resource to properly navigate local, regional or even national skills markets. As these employers are likely to be already engaged in the delivery of apprenticeships, IfL is not convinced that providing government funding for apprenticeships in this way will meet the objectives of increasing participation of smaller businesses in the apprenticeships system. Furthermore, we believe that the provider funding model is best suited to meet our central principle for reform, which is promoting universal access to the very best teaching and training. Providers, and professional teaching and training practitioners they employ, are best place to take the lead on the quality of the delivery of teaching and training. IfL supports the Employer Ownership Pilots as a mechanism through which employers can develop projects to improve the skills of the local workforce. IfL does believe that there is a role, as we have outlined earlier in our response, for direct payments to be made to employers as an incentive to recruit young people and / or recruitment in to current or projected skills shortage subjects or areas as defined by Local Enterprise Partnerships. Model 2: PAYE Payment Model 9. What are the advantages and disadvantages of providing government support for Apprenticeships in this way? 10. How should this system be designed to ensure it is easy to engage with for employers and training providers? 10

11 IfL has concerns about the complexity of how this system would need to operate, and the up-front resource implications for SMEs and micro-businesses and the potential lag of one year in receiving completion funding under a payment by results system. This would also be a complicated system to administer at a time when numbers of apprentice starts are declining so IfL believes that it would not be right to choose now to place additional financial risks and burdens on SMEs and micro businesses when they are areas we want to see apprenticeships grow. Model 3: Provider Payment Model 11. What are the advantages and disadvantages of providing government support for Apprenticeships in this way? 12. How should this system be designed to ensure it is easy to engage with for employers and training providers? IfL believes that this model is most appropriate route for the government s contribution for the funding of apprenticeships. It will provide minimal financial risk for SMEs who are keen to recruit and train apprentices, minimal disruption in a system which is currently unstable, particularly in relation to declining starts but directs funding at where there is expertise in the development and delivery of cutting edge, motivational and inspiring programmes of learning. Which model works best for employers, learners, providers and Government? 13. All things considered, which is your preferred model and why? IfL does not believe that there is an easy solution or a homogenous approach that can be taken with the funding of apprenticeships. As government funding must be spent in ways that will have maximum impact, IfL has suggested a system combining model 3 (provider payment) to cover the costs of training with model 1 (employer direct payment) as a possible way to deliver incentives to employers, in other words the employer/provider partnership is funded. Additional incentives can be 11

12 targeted through premium rates for apprenticeships for 16-18s and for skill shortage areas such as engineering, in order to boost the recruitment of young people and to get a closer match between the needs of the economy and apprenticeships in particular industry sectors. This system could also be accessed by Local Enterprise Partnerships who could offer incentives for the training of apprentices in areas where there is a current of projected skills shortage through their strategies for local growth. There could be a national premium given as a bursary to apprentices themselves in key skills shortage areas, for example disbursed through the Royal Academy of Engineering which in turn by involving the profession helps raise the status of the apprenticeship route. 14. What should the government take in to account when making the transition from the current system to your preferred model or any other models? 15. What impact would adopting your preferred model and the other models have on businesses engagement with and approach to Apprenticeship training? IfL hopes that consideration of the proposals and comments we have made will support the government in designing an apprenticeship funding model that will create more opportunities for young people and adults and focus resources and incentives where they will have the most impact. 12

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