Apprentice funding cuts. Let’s focus on facts, not fiction

I would like to respond to the article by Roger Francis entitledProvider Funding Cuts – They Are Dead Parrots. Welcome To The New World . I couldn’t help feeling that the article laboured under the false impression that a free-market approach to apprenticeships is guaranteed to work. For me, this is a fundamental flaw that has skewed the debate towards one based upon theory rather than experience.

Apprenticeships are a public service. By that I mean they have relied upon billions in tax payer funding for over 30 years. The proposals put before us suggest that, overnight, apprenticeships can move from a public service to one similar to the commercial world.

To illustrate the futility of such a proposition I would like to stack up the collective experience of colleges and providers who are actually delivering apprenticeships sometimes under very challenging circumstances. In essence, I’ll respond to the theory with cold, hard facts. 

Four reasons why the new system is flawed

First of all, Mr Francis suggests that providers view the current funding system as ‘horribly complex’. I struggle to find any evidence for this assertion. The current funding system is imperfect and providers have asked for improvements but we have never asked for the wholesale change being proposed. Furthermore the current system is in no way more complicated than PAYE or the offside rule. Apprenticeships are complex and have evolved over three decades. One would expect their funding system to be sophisticated and robust. So I pose the question why does complex = horrible? The current system actually works and has stood the test of time. I think it could be adapted, particularly in a transition period, to offer a rate per apprenticeship. This would have a stabilising effect juxtaposed against the uncertainty and instability of the system being imposed. If until 2019 apprenticeships had a set rate then employers could focus on selecting providers who offer quality and service rather than a cheaper deal. 

Second. The topic of uplifts is a nuanced and complex issue. Uplifts were introduced to tackle market failure and ensure equality of opportunity. The government understood that without uplifts the number of apprentices and/or the quality could suffer. Uplifts were introduced and survived under some of the most market orientated governments so I struggle to understand how they have become an irrelevance. It defies logic that we have needed uplifts for 30 years but from 2017 we don’t? Experience and evidence shows that it costs more and takes more effort to support learners from deprived post codes and in expensive areas. Ethnic minority groups are two times more likely to live in a deprived postcode than the majority White British. Apprentice achievement rates for ethnic minority groups are nationally up to 7% lower than White British apprentices. These are facts underpinning disadvantage in our communities and the notion that the market will redress this inequality is false. If the market could have sustained a commercial apprenticeship programme and cure inequality then why has the state been obliged to intervene for a generation?

Third. The proposed capping of rates provide a real undermining threat. I agree with Mr Francis that from April 2017 it will be different, but will it be better? We have built a business model over many years based upon a nationally agreed rate per apprentice. This rate is modelled upon a formula of learning hours, resources and the complexity of each programme. Therefore, in order to deliver a quality of service in the future we have to base ‘prices’ on what we receive now. Consequently if a quality service has been supported by ￡4000 per Business Administration apprentice, what are the consequences for the same provision when the cap is ￡2000? Either we have a free market or we don’t. What sort of system asks us all to negotiate commercial rates with an employer but then imposes an arbitrary cap on those negotiations? It belies a cowardly approach to the ‘funding of apprenticeships’ assuming that providers and employers are unable to reach amicable value-driven decisions. Mr Francis himself acknowledges that the Functional Skill cap circa ￡470 for a kid from Tottenham is inadequate. I agree with him. The government through capping is undermining it’s own policy of a commercially driven business model.

Fourth. Employers do care about funding rates, or at least those who have put in the hard yards for the last 30 years. Employers understand that quality outcomes cost more. You get what you pay for. Employers recognise that apprenticeships are not transactional. There isn’t a simple formula of Employer + Apprentice + Money = Success. Employers understand that apprenticeships are transformational programmes built around people. The stability of their provider and the funding of quality is vitally important. Employers worry that reduced amounts per apprentice will lead to a ‘no thrills’ service and who benefits from that?

History tells us that changes comes slowly

I don’t know if Roger is a lackey from the SFA. What I do know is that I have worked through seismic changes in the sector for 17 years. I have endured the TECs, LSC, SFA, YPLA, EFA and all sorts of shifts and changes both strategic and operational. I have accumulated experience of this sector and how it copes with and responds to change. We do cope with change but only when it is measured and the government has won the consensus of the provider network. The proposed changes feel like something been done to us rather than been driven by us. This approached has failed in the past and will fail in the future.

For example, I can still recall how it took 3-4 years to embed the delivery of Key Skills into frameworks. Providers struggled with the step change as did many employment sectors such as the care sector and retail. (I imagine Twaddle Retailers had a hell of a time). These were difficult times for all concerned yet Key Skills are chickenfeed compared to the proposals for 2017.

For example, when we were assured that Adult Loans for Apprenticeships were the way forward providers begged the SFA to listen to us. They didn’t and it took 6 months for adult apprentice numbers to collapse.

For example, the last time the SFA opened the sector to all and sundry was through Individual Learner Accounts and that cost billions of pounds wasted through fraud to realise they were a bad idea.

Each significant change that hasn’t had the backing of the sector has either failed entirely or taken much longer to implement. This is not theory, this is a factual reflection. The implementation of these proposed funding changes are too much, too fast and badly conceived by professionals who do not deliver apprenticeships.

Even the SFA is unprepared

As I write this the SFA has been forced to delay ESF procurement decisions, Learner Loan growth decisions and postpone the launch of RoATP. It is hypocritical for the SFA to tell us they don’t have the resources to hit their own self-imposed deadlines while ignoring providers’ pleas for more time and support. If the SFA can’t assess, score and announce the outcome of a handful of ESF tenders then what hope is there?

So I’m with the AoC and others, including Levy paying employers. The government needs to slow down, think carefully and get this right. Call upon the most experienced and level headed advisers that you have: the provider network. The Levy is a good idea, Standards are a good idea but this implantation plan is a bad idea. Take our advice and we can ensure that all the rewards of the reforms are secured without endangering the integrity of the apprenticeship programme. The consequences of listening to the wrong advice risk disaster and I can assure you, if it does go badly wrong, the champions of the free market will be nowhere to be seen. 

Matt Garvey, Managing Director at West Berkshire Training Consortium

Roger Francis recent article can be found here. Both of the gentlemen will be speakers at The Apprenticeship Levy Conference 27th October, the Welcome Centre Coventry