A Pause for Thought or a Rewind?

The Pause in the Procurement of Apprenticeship Provision for Non-Levy Paying Employers and Allocation of Funding to Providers for the Delivery of Apprenticeship Provision – 1 May to 31 December 2017

In April, the Education and Skills Funding Agency (ESFA) announced that it was ‘pausing’ the procurement of Apprenticeship for non-levy paying employers; an exercise that started in autumn 2016 with an invitation to tender for a 15-month contract for services (if successful) running from 1 May 2017 to 31 July 2018.  We have, below, summarised the action UVAC has undertaken to outline the impact of this decision and the options for moving forward to ensure Degree Apprenticeship is available for use by non-levy paying employers.

The current position:

• HEIs on RoATP without an existing Skills Funding Agency (SFA) Apprenticeship Contract – Despite all the encouragement to enter the Apprenticeship market and the effort and expense in applying to the Register of Apprenticeship Training Providers (RoATP) and the invitation to tender (ITT), HEIs without a prior SFA Apprenticeship contract have not been provided with an allocation for Apprenticeship provision for non-levy paying employers

• HEIs on RoATP with an existing SFA Apprenticeship Contract – For HEIs on RoATP with an existing SFA Apprenticeship contract, the ESFA has simply used historic data to provide an allocation (basically previous delivery value to ‘non-levy’ payers + 10% uplift). Degree Apprenticeship is, of course, a new programme and HEIs are new providers.  Past HEI Apprenticeship delivery values are very low; therefore, ESFA allocations to HEIs for Degree Apprenticeship provision are very low and in some cases, make delivery impossible.  ESFA has not recognised either the newness of Degree Apprenticeship, the projected growth in Degree Apprenticeship or that Degree Apprenticeship requires new providers, in the main HEIs, to enter and grow the Apprenticeship market.

The newly formed ESFA focus on existing providers and historic patterns of provision favours private training providers and is heavily skewed towards the lower level Apprenticeship provision that has dominated Apprenticeship.  The ESFA procurement approach runs counter to the Apprenticeship reforms.  Apprenticeship should be led by employers; and the procurement of Apprenticeship provision should be based on the future demand for Apprenticeship not on historic patterns of provision for Apprenticeship frameworks which are being phased out and replaced by employer developed Apprenticeship standards.  Non-levy paying employers should be able to use the providers on RoATP most able to respond to their needs and develop the skills of their workforce.  Apprenticeship provision should not be restricted to providers who were awarded delivery contracts (as far back as a decade ago in some cases) by the ESFA’s predecessor organisations.

The ESFA’s procurement approach severely disadvantages not just HEIs, but SMEs that wanted to use Apprenticeship to increase the higher-level skills of their workforce and increase their productivity.  In effect, as a ‘skills’ body, ESFA through its approach to procurement and focus on existing providers is prioritising delivery of level 2 Apprenticeships in areas such as business administration and customer service over Degree Apprenticeship in STEM areas and in the professions and not in the training and development required by the Government’s Industrial Strategy and essential to deliver LEP skills priorities.

In response to ESFA’s procurement approach UVAC has:

• Lobbied ESFA to undertake, with HEFCE, an urgent analysis of the impact of the ‘pause’ in the procurement on Degree Apprenticeship occupational and geographic coverage
• Lobbied ESFA to increase funding allocations to HEIs on RoATP to reflect the projected growth in the degree apprenticeship market and provision developed through the Degree Apprenticeship Development Fund (DADF)
• Requested that options are considered to support HEIs without an existing Apprenticeship contract – we have developed an analysis of potential options
• Written to the recently launched Institute for Apprenticeship outlining our concerns and detailing the detrimental impact the ESFA’s approach will have on Higher and Degree Apprenticeship, employer choice and impact on Apprenticeship as a programme to enhance social mobility and raise productivity.

UVAC will also shortly be providing HEIs with practical advice on the possibilities of applying for growth as part of the established ESFA system.

The implications – In our correspondence UVAC has requested that the ESFA consider the following issues:

• Degree Apprenticeship Development Fund – Government through the Degree Apprenticeship Development Fund (DADF) has stimulated and invested (£8.5m) in HEI development of Degree Apprenticeship provision. The ‘pause’ in the ESFA procurement means that some HEIs who have developed Degree Apprenticeship provision (thorough competitively allocated Government funding) may not, as they and Government had intended, be able to deliver from September 2017 Degree Apprenticeships starts to non-levy paying employers. Such delivery may also be required by their HEFCE DADF contracts. Likewise, non-levy paying employers that have worked with DADF supported institutions could be denied access to Degree Apprenticeship provision they will want to use to develop the productivity of their organisations. Bizarrely, such employers should still be able to secure provision in, for example, old Apprenticeship frameworks at level 2 in business administration or customer service.

• Degree Apprenticeships have a Critical role in Raising Productivity and Enhancing Social Mobility. HEIs have to be engaged in the delivery of Degree Apprenticeship – The providers who benefit most from the pause in procurement are training providers focused on level 2 and level 3 Apprenticeship provision.   The ‘historic’ SFA Apprenticeship provider base was largely focused on level 2 and level 3 provision and those providers who are having their contracts extended cannot simply ‘step in’ to deliver Degree Apprenticeship. The ‘pausing’ of the procurement means there will be substantial ‘occupational’ and ‘geographical’ gaps in the ESFA provider base for Degree Apprenticeship that non-levy employers will demand.  The ESFA decision means funding of Apprenticeships (the Government’s flagship productivity programme) for SMEs is being prioritised for Apprenticeships at level 2 and 3 in business administration, retail and customer service etc. rather than occupations such as Degree Apprenticeships in digital solutions and leadership and management, critical to regional and national skills needs.  Apprenticeship is also a core component of the Government’s Industrial Strategy. HEIs have considered their approach to Degree Apprenticeship on this basis and worked closely with LEPs, PSRBs and others to plan and develop provision that will not now, in the short–term, be funded.

• Differences in the Use of Apprenticeship by Levy Payers and Non-Levy Payers – Simply re-contracting with the ESFA provider/delivery network based on historic patterns of engagement will create bizarre differences in the use of Apprenticeships by type and by levels and between levy paying and non-levy paying employers. Levy payers will be able to use the Apprenticeships that are of maximum benefit to their business and Degree Apprenticeships could boom in this part of the market. In contrast, non-levy paying employers’ use of Degree Apprenticeships will be substantially restricted. If you’re a large business, you can invest in and use any Apprenticeship you want – in contrast an SME /non-levy paying employer will have their ‘choice’ of Apprenticeship severely restricted.  Non-levy paying employers may not be able to unitise a substantial proportion of the Higher and Degree Apprenticeships developed though the Trailblazer process. Instead their ‘choice’ will be skewed towards the old lower level Apprenticeships Government is trying to replace.

• The Favouring of FE Colleges and Private Training Providers – HEIs have been encouraged by (firstly BIS), DfE, HEFCE, ESFA and membership bodies UUK and UVAC to invest in the Degree Apprenticeship agenda. Many HEIs, from across the sector, without an SFA contract or funding envelope have invested substantially (in their own staff and capacity) in preparing to deliver Degree Apprenticeship. HEIs have also invested hugely in applying to RoATP and preparing procurement applications.  Regardless of how good these applications are the ESFA has chosen to favour the status quo and the delivery of lower level provision. Providers focused on lower level Apprenticeship provision will be given earlier access to and a head start in the non-levy paying employer market.

In moving forward there is a need to re-establish trust and the ESFA must demonstrate its commitment to the higher-level skills agenda in general and Higher and Degree Apprenticeship in particular. ESFA must prove that it is an education and ‘skills’ funding agency and not an agency only focused on schools and lower level skills delivery.