Wednesday 17th January 2018

The Apprenticeship Landscape – The only constant is change

Simon Ashworth, Chief Policy Officer of the AELP gives his thoughts on the current Apprenticeship Landscape:

A previous boss, who was a veteran of the Further Education sector used to have a saying which still resonates with me today. In Further Education, the only constant is change and it is the change that is constant. With that thought firmly in mind I want to use this short article to take a look forward on the future apprenticeship landscape, because one thing is guaranteed and that is what we have in place now, will certainly have shifted and will change over the next 12-18 month period. Let me try and help you stay ahead of the game.

Access to the marketplace is changing. From April 2019, there will be no further direct contracts for providers from Government. The removal of this clunky Government contracting will change the way providers are used to working significantly in regards to growth, performance management, planning and strategy. Overnight the capacity in the system will virtually double employer choice, with employers of all sizes (levy and non-levy payers) being able to select any provider approved on the register of apprenticeship training providers (RoATP).

The apprenticeship funding methodology will have to change too. Why? Because the current model employed by Government is simply unaffordable and the numbers do not stack up in the current methodology and the variables which are currently used. We know despite Government expectations, very little negotiation on price is actually taking place between employers and providers. The average apprenticeship maximum value for an approved Level 2 apprenticeship standard is nearly £8k, at Level 3 it is £14k, Level 4 £14k, Level 5 £17k, Level 6 £25k and Level 7 £24k. The standards are employer-led, in line with the latest needs of industry, more expensive to delivery and therefore carry a premium. However, these figures far outweigh the funding rates previously associated with apprenticeship frameworks which were purely funded by Government. Layering in slowing UK economic growth means a slowdown in employment and salary increases will result in less tax being ultimately collected through the apprenticeship levy and you will soon start to see why the numbers in the current format don’t stack up.

In order to balance the books this means one or a mixture of the following will likely change: (1) The levy methodology will change, bringing more employers into scope or increasing the current 0.5% rate. (2) Employer co-investment will be increased for non-levy payers or levy payers spending in excess of their levy – either across the board of for specific sectors or standards. (3) The maximum rates of funding for some or all the standards will be reduced to slow down consumption of the finite budget.

Is that all the change? Alas no keep reading. Under the mantra of putting “employers in the driving seat” there are two more big changes coming down the line. From April 2018 levy paying employers will be able to transfer up to 10% of their levy “to their supply chain” – the key point here is this point hasn’t actually been defined, but expect clarification on this in coming weeks. Finally, the Government’s aspiration and policy approach is that all employers will be able to select and contract separately with both training providers and End Point Assessment Organisations (EPAOs) through the online apprenticeship service. EPAOs are already active and developing relationships directly with large employers. Will more funding be ultimately spent on end point assessment? Currently EPAOs tell us that the average actual price being charged for EPA is circa 11-15% of each standard’s funding band. More funding spent on assessment will ultimately mean less spent on the training. A careful balance will be required, interesting times ahead for 2018 and beyond…

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