Apprenticeships

APP 63

Written evidence submitted by the Electrical Contractors’ Association (ECA)

Executive summary

1. While there is presently no proper definition of an apprenticeship in the UK, it is generally accepted that it will lead to public recognition on completion that the apprentice has achieved proficiency in a trade, profession or occupation. Short training courses that do not properly ready a candidate for a career in his or her chosen profession should not be treated in the same way as a demanding four year Level 3 apprenticeship. A focus on quantity continues to dilute the apprenticeship ‘brand’, so public funding and Government focus should be targeted at encouraging apprenticeships in the true sense of the term, rather than to subsidise employers and training providers in offering less effective, lower level training.

2. As part of ensuring quality provision, the Government should reverse its idea to ‘badge’ the technical component of an apprenticeship as an apprenticeship in its own right. There is little value for learners in such arrangements, which are commonly called programme-led apprenticeships, because the full apprenticeship is only delivered when the learner has achieved the work-based training component provided by an employer. There is also no value in learners believing they have fully qualified when the relevant industry cannot recognise their achievement and offer them employment. This would create confusion within the apprenticeship framework. Notwithstanding the clear commercial benefit for colleges and training providers, this situation does not serve the employer, learner or the taxpayer.

3. In industries such as construction, where new apprenticeship start figures released by the Government in October 2011 comparing the 2010-11 academic year against the previous year were roughly flat, the availability of contracts is the central factor that determines whether companies will take on and deploy apprentices. With this in mind, certainly in construction, public funding on capital spending is perhaps the best way to boost meaningful apprenticeship numbers. Another move that could have an impact on boosting training in the construction sector would be for Government to promote main contractors and clients to include in their pre-qualification questionnaires (for suppliers to access tender lists) relevant individual qualifications requirements. This would reinforce that relevant skills and qualifications were expected to be present amongst the workforce and help turn the acquisition of skills into a business driver.

4. We advocate Government requiring all public bodies to tie meaningful and appropriate apprenticeship commitments to contracts tendered, ensuring that where there is work, training is taking place.

5. Whilst £1,500 apprenticeship bonuses for SMEs are a welcome measure, a greater level of support is likely to be necessary, particularly in the first year when an apprentice is largely unproductive and needs more supervision. This is particularly the case in more specialised and demanding apprenticeships where the employment costs of a Level 3 aspirant apprentice over a four-year training period might be £80,000. In the electrical contracting industry, where the majority of operators are small firms, SMEs make a very significant contribution to training in the industry. As such, SME disengagement in our industry could have a disproportionate effect.

6. The current funding arrangement of halving public support for apprentices over 19 is arbitrary and does not take into account different industry operating environments. More specific industry involvement in developing apprenticeship budgets for their respective industries might help attract more employer engagement, particularly where new start figures are flat.

Introduction

7. The Electrical Contractors’ Association (ECA) welcomes the opportunity to respond to the inquiry. The ECA is the UK’s largest trade association representing electrical engineering and contracting companies. The electrical contracting industry employs 350,000 operatives and 6,000 apprentices. Our 3,000 members range from local electricians to national companies with several branches employing thousands and our members carry out a range of work, from domestic heating and lighting to cutting edge environmental control technology.

8. Skills are a key area of concern for the ECA. The average age of a qualified electrician (NVQ Level 3) in the commercial & industrial (C&I) part of our industry is 45-50 years old. C&I electricians are expected to hold industry recognised qualifications, and the looming skills shortage has been exacerbated by a long-term decline in employers taking on apprentices, partly resulting from a rise in the use of agency labour and partly because of the cost of employing apprentices (given the fluid labour market in the industry where qualified apprentices may move on before the employer can recoup what he/she has invested in training the apprentice over four years).

9. Another aggravating factor has been the proliferation in construction of pre-qualification certification schemes. Operated by the client or main contractor, these pre-qualification questionnaires (PQQs) test suppliers on a range of questions which relate to the corporate competency of suppliers to carry out potential work. Suppliers are then placed on the client’s or main contractor’s tender list. Whilst these schemes play an important role in giving clients details about company standards, many do not incorporate meaningful references to the qualifications of those employed by the supplier concerned. Many private clients and main contractors operate numerous, often duplicating PQQ schemes. Maintenance by a supplier on numerous tender lists is expensive and diverts companies from investing in their workforce. Put simply, PQQs drive new business, and the de-coupling of relevant employee qualifications means that the acquisition of skills does not. Government should recommend PQQs to require relevant individual qualifications. This move, if followed by private clients and main contractors, could have a powerful effect on boosting training in the construction sector.

10. Whilst economy-wide apprenticeship numbers have increased in the last year with the re-alignment of public funding away from other forms of training, the construction industry has not replicated this trend. Indeed, this is reflected in a June 2011 ECA member survey, where half of respondents stated that they had trained an apprentice in the last 12 months; however, less than a quarter planned on taking on an apprentice in the next twelve months.

11. Despite the decline in apprenticeship numbers within electrical contracting, it is still one of the key industries providing apprenticeships within the craft industries and the wider economy.

Answers to the Committee’s questions

(a) How successful has the National Apprenticeship Service (NAS) been since it was created in April 2009? Has it helped bridge the gap between the two funding Departments? (BIS and Department for Education)

12. In our industry, where the training infrastructure (established training providers, for instance) has long been in existence, as has a culture of training apprentices, the NAS has not had a significant impact on quality or provision. Industries with nascent apprenticeship offerings may have benefitted more.

13. In the ECA’s view, the NAS is more distant from industries and trade bodies than the Sector Skills Councils (SSCs) in terms of responding to enquiries or seeking stakeholder viewpoints. It seems only to recognise employers and potential apprentices and has no effective mechanism to respond to questions or input from organisations such as the ECA, which play a significant part in shaping our industry’s engagement in apprenticeships.

14. Additionally, NAS’ advice to employers and prospective apprentices is much more general than that available from, say, the SSC, the ECA or specialist training providers serving our industry. The value-added input here is questionable. Both issues are understandable given NAS’ difficult task of having to operate across the economy. NAS’ role and funding received as a certification body for apprenticeships would be better retained within the SSCs.

(b) Is the extra funding promised by the Coalition Government necessary for apprenticeships? How can this funding best be spent?

15. The ECA welcomes recent government attempts to promote and influence training. However, they have used the apprenticeship ‘brand’ to do so by stretching its definition. This has seen public money being spent on ‘apprenticeships’, which are nowhere near to what an apprenticeship should be. The Skills Minister, John Hayes MP’s pre-Christmas declaration that all new apprenticeships must take place over a minimum of 12 months is welcome, as is the Government’s proposed review of the quality of apprenticeships and promise to withhold public funding from sub-standard training. (The latter needs to be properly defined in consultation with industry, and then enforced).

16. Public funding should be available for apprenticeships that really do prepare an individual for a career in a chosen profession or trade. Funding, however, should not be made available where firms and training providers have labelled basic training programmes as apprenticeships in order to attract public funding. A rigorous Level 3 apprenticeship should not even be compared to a twelve week training course that, in the ordinary course of events, would be funded wholly by the employer as a basic training and staff induction activity. We need to focus public funding instead on the kind of apprenticeships that can add value to individuals, industry and UK plc in the longer term. This may be through indirect funding of apprenticeships to encourage participation by corporation tax or national insurance breaks, for instance.

17. Looking at indirect funding levers, in the wider construction industry, the ECA believes that increasing capital spending may be the best way to stimulate meaningful training. Work is crucial in order for employers to take on apprentices and give them the ability to deploy the learner.

18. For direct apprenticeship funding to have a greater impact, particularly with a view to re-engaging SMEs, more funding is necessary. The Government may be able to redirect funding towards respected and rigorous apprenticeship training that is of strategic importance to the UK by reducing the support available for training that does not deliver the same quality of output.

19. One way of increasing meaningful training is by tying training requirements to public contracts above a certain value. Plans to tie proportionate training requirements to appropriate public sector contracts could help ensure that all firms tendering for public work operate on a level playing field (i.e. companies that have withdrawn from training as a business model have lower costs and benefit from the investment of others). This would re-establish the acquisition of training as a business driver – which is of particular importance in parts of the economy where a growing market failure exists because industries are not investing in the next generation of skills (such as electrical contracting). For companies that do currently train, we do not foresee any increase in bureaucracy if the measure is implemented in the right way.

20. Of note, where local authorities are stipulating apprentices in construction contracts they tender, should the apprenticeship last longer than the contract, firms should be allowed to register these apprentices where other local authorities demand similar requirements. Currently, apprentices sometimes hired under one public contract are being ‘let go’ mid-training by firms, with ‘new’ apprentices needing to be registered for another contract.

(c) Are apprenticeships of a high enough quality to benefit apprentices and their employers? Should there be more Level 3 apprenticeships?

21. In traditional craft industries where apprenticeships have their roots, it is assumed that an apprentice will, on completion, be able to work effectively and unsupervised in his or her chosen occupation. Since Level 3 is the lowest level vocational qualification that develops and measures the ability to work unsupervised, it is the ECA’s view that the term ‘apprenticeship’ should only apply to frameworks producing Level 3 or better outcomes.

22. Government and industry may choose to recognise and potentially fund lesser frameworks and qualifications where they are seen as useful, but the ECA would ask that these be called something else.

23. There should be a greater focus on encouraging higher apprenticeships. Indeed, On 1 February 2012, the National Audit Office (NAO) published a report, ’Adult Apprenticeships’, which noted that only 33% of apprenticeships in England are at advanced level (Level 3), compared to 60% in France.

24. Firms such as the UK’s major construction contractors may recruit high-potential apprentices that can move swiftly into junior management and beyond – these are likely to be individuals that possess the capacity to go to university, but have a different set of aspirations. To ensure the development and retention of a technically-literate management base in this country, the apprenticeship route must be capable of appealing to such individuals and the firms that will employ them.

25. The ECA does have serious concerns that the Government intends the college-delivered technical component of a qualification to become a qualification in its own right (aligned with, but distinct from an NVQ). These alone will not leave an individual qualified to enter our industry. The only possible beneficiaries from such a development are awarding bodies, colleges and training providers, which have a simple commercial interest in this activity. We recommend that the Government does not carry forward this change in classification. If the decision has been made, we urge the Government at the very least to require providers to make transparent the real value of such courses to learners and employers, so that no-one mistakes them for full, industry recognised qualifications.

26. The industry is already concerned about the growth of sub-standard training that is taking place outside the apprenticeship framework (particularly where public funds are drawn down), and the confusion created for learners and employers. The re-classification of apprenticeship components, as mentioned above, would simply add another layer of uncertainty, and worse still, would create confusion within the apprenticeship framework.

27. Indeed, the ECA fears that, if unchecked, such training will serve to further weaken the UK’s vocational skills base. In our industry, part-qualified operatives will likely swell the numbers of those already working in the domestic sector and grey economy, rather than fully qualify to be able to enter the C&I sectors, where there is an imperative to qualify and where the industry is experiencing an entrenched skills shortage.

28. This follows the regrettable decision of the Department for Education, in Spring 2012, to extend funding and accreditation for six technical certificates [1] even though the entire building services engineering sector expressed concern that their continued funding and delivery by colleges and training providers has led to individuals attempting to enter the industry without a recognised qualification. We are convinced that only full, industry recognised qualifications should receive public funding.

(d) Apprenticeship bonuses – how should they function? Will they encourage the involvement of more small and medium sized businesses to take on apprentices? If not what will?

29. The £1,500 apprenticeship bonus for companies taking on their first young apprentice is very welcome in the context of an investment in skills. However, for more specific and demanding Level 3 apprenticeships, which are likely to be more expensive and with employment costs over four years perhaps totalling £80,000, this level of support is not enough to exert significant influence over a company’s decision to employ. A greater level of support (or flexibility of funding, as outlined in answer to question ‘e’) is necessary, particularly in the first year when an apprentice is largely unproductive and needs more supervision.

30. In industries such as ours, which is mostly comprised of small businesses, encouraging SMEs to train in difficult economic times is of particular importance. Currently, SMEs make a very significant contribution to training in the industry, especially given that some of the bigger industry players have chosen to employ an indirect workforce (limiting the training that they can offer).

31. Of course, security and availability of work – particularly in the longer term - is the key factor influencing the decision of any business, but especially that of an SME to invest in an apprentice. Such a decision commits the employer to a three to four year training programme and certainty about the future viability of the business is a central consideration.

(e) Is the current funding arrangement for training of apprentices of 100% for 16-18 year olds and 50% for 19-24 year olds appropriate?

32. Arbitrary funding policies can prove inflexible. Whilst the ECA accepts there is a strong social imperative to say that 16-18 year olds should be funded to a higher degree than more mature apprentices, we believe that it would be productive to allow industries the opportunity to feed into Government on the way funding should be spread to suit their particular business environment. By way of example, most apprentices under 18 cannot enter a construction site. This inhibits work-based training and limits the willingness of firms to take on slightly older apprentices when they might lose access to 100% funding. Encouraging industries seeking to tailor funding packages to enter into discussions to better suit their firms’ needs might encourage a greater engagement in training.

3 February 2012