Wednesday 25th October 2017

The Decline in Apprenticeship starts – Time to Rebase!

Last week saw the much-anticipated reporting on the decline in apprenticeship starts for May – July 2017, with much of the decline being put down to the slow take up of levy employers. We also heard today, the SoS stating this was much anticipated by her officials – Really!

But is that really the issue and what may we expect for the next ‘peak period’ of the year.

For us as a provider, we haven’t experienced a significant drop – whilst volumes have not increased year on year, we certainly haven’t witnessed the drop in volumes others appear to have experienced and certainly in August – October these have continued to hold up with the benefit of more levy starts. October 2017 looks set to be a record month for 3aaa in terms of starts but let’s analyse possibly some of the underlying issues:

  • April 2017 starts– many providers, particularly those with large employers as their clients and mainly 25+ took advantage of ‘free enrolments’ before the start of the levy in May – with record numbers of starts in April and starts plummeting in the 25+ category since – a surprise ? – not really but certainly could and should have been thought through as part of planning – with many providers now surviving on carry over funding, cash flow is really now starting to bite for many.
  • Stability – there has now been 24 months of turmoil in the market, stop, start with tenders, RoATP and to be blunt treating providers as some sort of hindrance to the reforms rather than a facilitator of success. I really do hope policy makers think long and hard about this – it’s hard enough for the largest providers, the smaller and new providers simply don’t stand a chance in this market of gaining any form of traction.
  • 10% co funding – universal complaints that this has been a major issue since May for SMEs. For us, this has not been an issue, indeed we were charging employers a 1/3 not 10% with trailblazers and many employers see this as a reduction in cost not an increase- it may be our business has been built on this market but the sudden decline in enrolments does emphasise the importance that SMEs are to the success of the apprenticeship volumes, levy or no levy.
  • Levy employers taking time to reflect– certainly many levy employers have been delaying starts, not to save money but simply learning and development is not the priority that we all would like it to be. This, coupled with 2 years to even start to spend levy funds means ‘putting it off a few months’ is happening daily.
  • Poor publicity for the levy – there is no doubt the lack of publicity for the levy programme has had an impact and will continue to do so unless something is done about it – now. I can’t be the only one who receives almost daily calls from large employers asking me to explain to them how the levy works – ‘the employer is in control I hear officials say’ – yes they are and the implications of this are already clear- but the treasury currently stands to make a wholesome saving from unspent levy funds this financial year and possibly the next, even from their own modelling if you read the report published earlier in the week – £500m a year according to my numbers and that’s when it’s fully working.

So what needs to happen – my humble eight point plan:

  • A universal publicity campaign for the levy.
  • Reduce the spend time to spend levy funds from 24 months to 12 months.
  • Enhance the funding for 16-18 and support for SMEs – £1,000 is simply not good enough to reflect the additional cost – I’m less bothered though about the money – it’s the consequences that there are for young people I’m more concerned about in terms of opportunities.
  • Ensure levy employers use an element of their levy for 16-18 and allow them to use the levy to support wage costs in this limited area for a specific period of time (26 weeks).
  • Deliver standards quickly and efficiently that the MAJORITY of employers want – the SME community who make up 60% of all starts want generic skills, not specific job-related skills – there aren’t many SMEs or even large businesses that can afford even if they need a full time Cyber Technologist!
  • Put some stability in the system through the non-levy funding tender process.
  • Listen to providers by establishing a focussed task group that can work together to address the ‘unintended consequences’ of the levy and effect beneficial change.
  • Quality careers advice and support for schools – as organisations who are advising young people on career choices, my experience is that they simply have no knowledge of how the reforms will impact in the future in terms of recruitment strategies of employers which are changing dramatically.

I am a big supporter of the levy and we have invested heavily to work with levy payers.

But I am also committed to working with those smaller non-levy payers who are the major supporters of Apprenticeships across this country of ours.

The provider base is already too fragmented, there is little sign of new entrants of any size into the market, mainly because of the stop start change in policy and lack of any real stability.

I fear, like others that unless the ESFA intervene and listen to providers and work in partnership, we certainly aren’t going to have a business model that works for employers and most importantly learners.

I’ve heard officials say ‘let the market find its level’, well its certainly doing that but you wouldn’t establish a growth policy without thinking about how it is going to be delivered.

But I can’t help feel we are chasing the wrong thing as others have said before. 3m starts of which 43% are 25+ – I read the report last week contrasting Apprenticeships in a number of countries. What was telling for me more than anything is that whilst our level of starts is similar to Germany, if we were comparing an Apple with an Apple, Germany wouldn’t count what we define as an Apprenticeship in many cases and certainly not for 25+ – surely it’s time to REBASE the target and put some sense into the system.

So, I’m off back to yet more tenders – don’t get me started on that one – we will soon be spending more money on responding to tenders and public-sector organisations preparing them than the total amount of levy collected – I understand public procurement but some of the processes are just daft!

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