Iain Salisbury on the August 2016 levy update

Posted by  Iain Salisbury, Chief Executive, learndirect Apprenticeships,

In August the long awaited release of further information regarding Apprenticeship reforms were eagerly received. Both Employers and providers are working hard to prepare for the fast approaching Levy introduction and a number of gaps from previous updates were filled. Along with David Way, the former CEO of the National Apprenticeship Service, I presented an interactive Webinar to over 90 of our Employers to discuss these changes and to help them understand how they will impact on their plans and businesses.

Our Employers were pleased to hear that some of the items which they had concerns about had been listened to; like removing barriers to employees taking up Apprenticeships, by undertaking a sensible approach to prior learning and allowing employees living in devolved nations, but working in England, to be funded via the Levy. Both of these changes will increase take-up and provide a fairer Apprenticeship system.

Employers also welcomed the realistic bands that most of the standards have been put into, however they were shocked at the banding position of a vast number of frameworks. Many of our employers provide a financial contribution for adult learners, however they will not do this when the Levy begins. So even at the current rates, the funding going into individual Apprenticeships would have dropped and to cut rates further will risk the quality and availability of many frameworks.

There is no doubt that the move to standards is a positive one and it is understandable to nudge both Employers and providers to invest in moving off frameworks. Reducing frameworks will have a positive effect, but only if there is a standard to move to. However many of the new standards will not be ready in advance of the 1st of May when the new bands kick in. There are countless examples of frameworks, which have been reduced so heavily in price that they can no longer be viably delivered. This is particularly true of frameworks delivered predominantly to younger apprentices.

Surely a more sensible approach, if there were not a standard to move to, would be to delay reducing the price of the framework. It could be put into a comparative band to current funding, and then potentially six months after a standard is released, new starts could move to a lower rate. This would still encourage the move to standards whilst not risking the quality and the delivery of hundreds of thousands of Apprenticeships.

Another concern raised by our Employers was around the proposed sub-contracting rules. The requirement for the lead provider to deliver the majority of each Apprenticeship is simply not workable. Employers often require a single point of contact and then get the lead provider to build a network of providers to fill in the gaps in geographical coverage or additional programmes the lead provider doesn’t offer. This way they get one Apprenticeship programme to cover their needs so that they don’t have to deal with a range of providers. We are very concerned about the timescale to make the changes to sub-contracting. It is clearly an area that warrants more debate, with a sensible transition over a number of years required to protect learners and give them consistency of delivery.

Our Employers tell us that for non-Levy payers the contribution, even as small as 10%, is still likely to impact the take-up of apprentices, not to mention the concerns regarding bureaucracy of evidencing the payments. The suggestion is that the cost of the 10% was spread over the duration of the Apprenticeship, but what would happen if the employer stopped paying? Should the provider stop the delivery?

A very positive step was for micro-businesses not having to pay a contribution for 16-18 Apprenticeships, but why stop there! Surely these younger Apprentices should be fully funded no matter what size of business they work in.

Of course Apprenticeships are about getting young people into employment, but they are so much more than that. They are about raising the productivity of the workforce already in place today. The need to gain new skills and be productive is a lifelong journey, as we don’t see jobs for life very often in our current labour market.  In today’s hard times, we readily expect that people will often move employers and industries, evolving and changing new skills as required to meet employment needs. There is no doubt that an Apprenticeship is the right way to get high quality training to raise productivity at any age. It will ensure employers and the wider society will get real value out of their Levy spend.

This is a consultation, which is welcomed, but the incredibly tight timescales will limit debate and discussion. There is much to applaud in the decisions taken so far, but we should not lose sight of the objectives. We aim to deliver 3 Million high quality Apprenticeships in this parliament and develop a world leading Apprenticeship programme, raising the nation’s productivity. Devaluing current frameworks before there is a standard to move to, charging contributions to none Levy payers and ignoring employer’s views, does not support those aims. A more sensible transition from frameworks to standards is vital and serious consideration needs to be given to the impact, including the timing of proposed changes to sub-contracting requirements. If we get these areas right, it will then mean that all the other really great changes will have the desired effect and we will build an Apprenticeship system which will be the envy of the world.

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