Are apprenticeships worth the time and trouble? Despite the negative press, changes are on the way and so, finally, the tide may be turning.
A reminder, since April 2017, all employers in England who have an annual payroll bill greater than £3 million have been charged a levy by the government at a rate of 0.5% of their total payroll. Payment of the levy means those firms can access funds for apprenticeship training to up-skill their employees. If an employer doesn’t use the funds within 24 months the money is returned to the government – so, it’s a ‘use it or lose it’ scheme. It is a devolved policy so apprenticeships in Scotland, Wales and Northern Ireland are organised on a different basis.
The CIPD has looked at the scheme’s performance over the past 4 years and is not impressed. In their assessment the levy has failed on every measure. In a damning assessment, it said that since the levy’s inception employer investment in training has declined, overall apprenticeship numbers have fallen and far fewer apprenticeships have gone to young people. As People Management reported back in March, they said the scheme will act as a ‘handbrake’ for employer investment in skills without reform and they urged the government to convert the levy into a more flexible training programme.
The Chancellor Rishi Sunak has listened. In the spring Budget in March he announced the government would be introducing a new ‘flexi’ apprenticeship scheme where trainees can gain experience across multiple projects with different employers. So, instead of working 12 months or more with a single employer, apprentices will be allowed to work across a range of projects, and with different employers, as part of the same qualification, especially useful in sectors with flexible employment patterns and short-term roles, such as construction, agriculture and the creative industries.
So, let’s hear more about this from Rami Labib who has been working with a number of clients in this area. Rami joined me by phone from Birmingham to discuss the current system and the new flexi apprenticeship. I started by asking him what he makes of the negative press around the current model and whether the changes will make a difference:
Rami Labib: “Obviously the apprenticeship scheme has been around for some time now but, I suppose, with some pitfalls. The reality is I don’t think the uptake necessarily has been exactly what the government would have wanted it to be and the general feedback is a lot of employers are saying well we're not really spending any more money than we would have done on training, and they are generally just commenting that it's quite difficult to use and cumbersome. There is kind of a government press now to reform and that is via this new flexi job apprenticeship scheme, which is kind of seen as like a new portable type apprenticeship. It is intended principally to focus on some of the sectors which have found it more difficult, historically, to access apprenticeships by virtue of the fact that apprenticeships need to be 12 months long. So, if you work, for example, in the creative sector, or perhaps in construction, you kind of move from project to project, so short projects, and it is quite difficult to get 12 months continuous employment to meet the apprenticeship requirements. So, the government has brought out this new scheme, or he's going to be bringing out this new scheme, which is intended to kind of address that. I myself have, I suppose, some reservations about how successful that would likely be, albeit I do accept, you know, I kind of encourage the government sentiments to try and address the issues being felt by these sectors, but quite whether the reform goes wide enough is another matter I think.”
Joe Glavina: “What about that new flexi-scheme, Rami. How different will it be?”
Rami Labib: “So there's been funding made available, there is a £7 million pound fund and a pot available and you need to apply, essentially, to the Department of Education for that, and to kind of clarify why you should be eligible to receive those funds. I think one of the key things that I think is being lost in this actually is there is already in existence the apprenticeship training agencies regime and the flexi scheme is very similar to that. So, in a way there's there isn't an awful lot of change from that pre-existing framework and the other thing to bear in mind is that the party that is essentially going to be the employment body, they are essentially going to be acting as an employment business which being brings in and of itself and entirety of new regulatory requirements by virtue of that. So, it’s not really going to be the employer’s side who are going to be kind of acting as the employment body, it’s more likely to be the training providers, in my in my experience, that would take that step and essentially give legs to the to the scheme. My concern is that by adding that, not only then do you have to comply with the new flexi apprenticeships rules, but also, by virtue of law, you are acting as an employment business and that in itself is additional regulation.”
Joe Glavina: “Why should employers listening to this bother taking legal advice? What’s the risk if they don’t?”
Rami Labib: “So I think there are a couple of things, Joe. I think the first point is just a general compliance point around probably the regime and that's regulated by the funding rules which the SFA updates on an annual basis. Often what you find, actually, is that contracts get signed and they are not suitably future-proofed or, indeed, updated periodically to ensure they meet the requirements of those rules and the upshot of that is that, worst case scenario, fundamentally you're operating in a way which is non-compliant and you could actually face clawback from the SFA, withdrawing your ability to access the funds in the levy pot, which is quite significant. The other issue you find, often, is because it is regulated in this way, employers tend to just take the approach of actually just signing up to training providers’ standard terms and not necessarily exercising due process in doing that for a multitude of reasons. My concern with that is obviously the standard terms of your training provider are undoubtedly going to be weighted in their favour and whilst they may comply, you'd like to think they’d comply with the precepts of the regulatory environment from a commercial and kind of risk perspective, they may be actually unpalatable and expose you to a level of risk which is unacceptable at an institutional level. So, advice on that would be get them checked. Often, it's not a huge exercise. If they are drafted in line with sector standards then it’s not a big job but it's something that is worth doing, certainly for that kind of peace of mind.”
Rami and the team have prepared a flyer which sets out the legal services currently on offer. They include things such as drafting agreements, preparing risk reports which highlight the main risks for employers of entering into training providers’ standard form contracts and, of course, advice on the application of the Funding Rules to your apprenticeship programme. We have put a link to that flyer in the transcript of this programme.
- Link to Pinsent Masons flyer on apprenticeships