Improving the value of apprenticeships

Organisations involved with promoting programmes for Apprenticeship Week (running from 6-10 February) have plenty of food for thought. Over the past 12 months, apprenticeships have attracted a lot of public attention, not to mention a great deal of scrutiny from Government departments.

The Government has invested a lot of money and energy into signalling its commitment to improving access to, and the quality of, these schemes in the hope they can be a valuable route into work at a time when youth unemployment is at a record high.

Last October, as part of the Government’s Comprehensive Spending Review, the Department for Business, Innovation and Skills (BIS) announced that it was boosting spending on apprentices by £250 million.

Then, in December, BIS declared that employers would be able to bid for control of apprenticeship funding, subject to evidence that they were running “high-quality” schemes, and that, from October this year, all apprenticeships for 16- to 18-year-olds should last for at least one year.

Delivering value for money

But despite all of this fanfare, a recent report suggested that the Government is still likely to face an uphill struggle in assuring apprenticeships deliver value both to employers and the taxpayers who subsidise these schemes. The report by the National Audit Office (NAO) claims that, although apprenticeships offer a good return for the public money spent on them overall, last year one apprenticeship in five lasted less than six months, with some finishing after just five weeks.

There has also been a growing body of criticism around how employers access funding for apprenticeships, with accusations that employers are either using the taxpayer-funded programmes to train workers who are already in a job, or to offer low skill, entry-level qualifications to train or induct staff. And because employers usually have to access funding via the suppliers that run the apprenticeship programmes, they may not always be able to control where that investment is targeted.

Tightening funding contracts

From August this year, the Skills Funding Agency, which is responsible for deciding where apprenticeship funding should go, will tighten contracts to allow for public money to be immediately withdrawn from providers not meeting the required quality standards. According to Katerina Rudiger, skills policy adviser for the Chartered Institute of Personnel and Development (CIPD), placing greater control in employers’ hands and cracking down on providers that don’t add value will help drive up the quality of apprenticeships on offer.

“Quite often it’s not the employer’s fault if the provider calls up and offers to train up an apprentice at no cost to them – they don’t know where that money is going,” she explains.

As employers gain more access and control to apprenticeship funding, it will force them to think about how they tailor that training to the needs of their organisation, she adds. The CIPD has issued a guide to help employers navigate how they can access funding either directly or through a training provider and to help them ensure that they deliver a high-quality apprenticeship programme.

“It’s not always possible to offer the person a job at the end of the apprenticeship, but an apprenticeship should at least provide them with the skills to get a job somewhere else,” adds Rudiger. “The companies that run successful schemes are thinking about the type of staff they’ll need in five years’ time, and how an apprenticeship can help them achieve that.”

A growing number of employers run their apprenticeship training in-house, rather than through a provider, and so access funding directly. McDonald’s, for example, is the UK’s largest private sector provider of training under its apprenticeship scheme, so far training 17,500 of its 87,500 British staff over the past three years. It is estimated that the chain accesses some £10 million per year from the Skills Funding Agency to run its apprenticeship scheme, which leads to a level 2 apprenticeship in hospitality and catering.

Access to funding

However, some critics argue that large, private sector organisations should not be accessing public money to offer a training programme they could arguably afford to fund themselves. Jez Langhorn, vice-president for people at McDonald’s UK, explains that McDonald’s spent £36 million of its own money last year on training its employees, and that, while it does access government funding to help cover the cost of its apprenticeships (and other programmes), this only covers some of the costs of delivering the qualifications. It has also set up an independent company to ensure good governance in how its uses public funding, called the McDonald’s Education Company, chaired by the Conservative peer Lord Hunt of the Wirral.

“We set it up because we wanted to turn that government funding into qualifications, and we wanted a transparent way to manage it,” says Langhorn. “We work with bodies such as the National Apprenticeship Service, we share best practice with other companies, we’re a certified awarding body and, as a training institution, we’re subject to Ofsted inspections, so we’re determined to maintain quality.”

Transparency

This sort of transparency around how money is used is vital for ensuring taxpayers get value for money when it comes to apprenticeships, according to the NAO report. Commenting on its findings last week, Amyas Morse, head of the NAO, said: “The Department … needs to target resources more effectively; confirm the training provided is in addition to what would have been provided without public support; and make sure that the funding system is informed by robust information on the cost and delivery.”

The CIPD, meanwhile, advocates a “workforce planning” approach to apprenticeship design, where apprentices are viewed as a talent channel in their own right and make a valuable contribution to the organisation because their training is well structured. Apprentices who complete a more basic level 2 programme can move up to a level 3 or higher-level apprenticeship, for example, or even begin the foundations of a degree.

Ultimately, the apprenticeship needs to be more than an altruistic gesture or cheap route to training if it is to succeed – it needs to make sense both for the business and for the career of the employee. “Apprenticeships are good for our business and the UK economy,” concludes Langhorn. “We are the biggest employer of young people in the country and many of them come to us without qualifications, so when we offer them something that’s the equivalent of five GCSEs, that’s incredibly valuable to them.”

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