Apprenticeships

APP 68

Written evidence submitted by Energy & Utility Skills Limited

Executive Summary

1. We welcome the opportunity to provide written evidence to this inquiry to contribute to an increase in quality and employer engagement in the Apprenticeship programme.

2. The Energy & Utility Skills Group makes the following recommendations:

a. While there clearly needs to be consistency of standards at a national level to protect the Apprenticeship brand, minimum government requirements for Apprenticeships should be better aligned to sector needs.

b. The role of Issuing Authorities should be extended to give the remit to make a full judgement regarding what is a fit for purpose, quality Apprenticeship in the sector represented.

c. Government should continue to recognise Apprenticeships at level 2 whilst developing the technician class of Apprenticeships.

d. Government to consider the incentives that can be offered to support employers recruiting Apprentices aged 19-24.

e. Government should work closely with Sector Skills Councils, employers and their supply chain networks to understand where and how properly targeted bonuses could enable SMEs to increase their intake of Apprentices.

3. Further detail on these recommendations can be found in paragraphs 4 to 32 below.

Introduction

4. This evidence is submitted by the Energy & Utility Skills (EU Skills) Group. Operating across England, Northern Ireland, Scotland and Wales, the group comprises EU Skills and, as a wholly owned subsidiary, the National Skills Academy for Power (the Skills Academy).

5. EU Skills is the Sector Skills Council (SSC) for the gas, power, waste management and water industries. EU Skills’ purpose is to ensure that our industries have the skills they need now and in the future. As an employer-led organisation with a Board that demonstrates a wealth of experience in the sector, EU Skills has over 95 employer members with representation across the sector and its supply chain.

6. EU Skills is the designated Issuing Authority for Apprenticeships with regard to occupations in electricity, gas and water supply, and waste management (also includes gas utilisation, recycling and waste water collection and treatment)

7. Through collaboration, the Skills Academy will develop the capacity, capability, quality and consistency of training and education to deliver the skills needs of a sustainable UK power sector. The Skills Academy has 28 employer members with representation across power generation, transmission, distribution, metering and the supply chain.

8. The energy and utility sector is critical to the UK economy. As a net importer of gas, with 16 power stations due to close by 2018, security of supply and affordability is critical to future growth, and to

ensure UK industries are competitive. This presents major challenges for investment in infrastructure and skills. EU Skills’ research [1] suggests that across the UK there are 561,550

employees operating in the sector within 60,155 businesses. The total GVA of the sector in 2008 was £26,368m, representing 2.1% of total UK GVA [2] . 

Background

9. The key drivers for skills within the sector are:

a. Given the safety critical nature of the sector it is of primary importance that all employees are occupationally competent.

b. The sector is experiencing an ageing workforce which is forecast to worsen over the next 15 years. Subsequently, a skills deficit exists in craft and technical roles and significant extra investment in attracting and retaining skills is required to refresh the workforce.

c. Replacement of ageing infrastructure and the introduction of new technologies is driving the need for significant investment and engineering and higher-level skills across the sector.

d. The five year regulatory cycle for the gas (transmission & distribution), power and water industries impacts on recruitment and skills development, with employers having to consider headcount targets over and above retention of key skills and expertise.

e. The drive for a UK-wide reduction in carbon emissions to meet climate change commitments is impacting on the sector. The transition from burning gas and coal to generate power towards the increased use of renewable and low carbon technologies (including nuclear and advanced waste treatment technologies) are driving the capability profile of the sector’s workforce.

10. The ambition and business imperative for the energy, utility and environmental sector is to recruit the estimated 94,000 [3] new recruits needed in the next five years (over 15% of the current sector workforce) to replace an aging technical workforce and, crucially, to enable the rapid introduction of new energy technologies to fulfil society’s expectation of a ‘green economy’. At least 8,000 new trainees will be needed.

11. Apprenticeships at level 2 and 3 are historically, and continue to be, a key mechanism of recruitment and training in the gas, power and water industries. The importance of Apprenticeships to the sector is demonstrated by employers below:

"By employing Apprentices, we are able to attract young people into the industry helping raise awareness of the varied and exciting job opportunities available…Apprenticeships are a great way to attract new people who really add value to the business." Viridor, 2010

"Scottish Gas could not meet their business objectives if we did not have the manpower that Apprentices bring to us. We recognise that there is a skills gap due to the aging workforce so we have accelerated our recruitment drive to plug this gap." Scottish Gas, 2011

"At Welsh Water, our business is built on growing talent from within…bringing Apprentices into the workforce has enabled us to succession plan for the future and grow our workforce, ensuring our very best standards of service continue to be delivered to our customers." Welsh Water, 2011

12. In December 2010, an Apprenticeship in Sustainable Resource Management was introduced to the waste management and recycling industry in England and Wales. In England, 420 starts were registered over the period January - July 2011.

Responses to the Terms of Reference

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

13. Whilst a joint Apprenticeship unit exists, each department has a different focus. BIS is concerned with the competence and skills required by industry for innovation and growth whilst DfE view Apprenticeships as a learning programme which will help in raising the participation age to 18. This dichotomy of agenda is intended to be complementary but leads to confusion in policy interpretation and delivery.

14. We welcome the purpose of NAS to support, fund and co-ordinate the delivery of Apprenticeships throughout England. We would also welcome greater integration with this service and that of the sector expertise provided by effective SSCs. It is here where greater growth in Apprenticeship numbers will come.

15. NAS has a role to improve the certification arrangements for successful apprentices. As part of this role, NAS has recognised the importance of the sector expertise held by SSCs and now operates a hub and spoke certification model where SSCs lead on evidence checks and certificate issue.

16. EU Skills supports the intentions announced by John Hayes to help ensure that every Apprenticeship delivers world class training for learners and businesses. However, government should be mindful that extending the minimum duration of an Apprenticeship may not lead to an automatic increase in quality in all cases. In order to achieve the best possible Apprenticeship system, future changes should be subject to employer consultation to ensure that the proposal has their full support.

17. Government should consider that Apprenticeships are designed to deliver occupational competence in a job role. Occupational competence is demonstrated through achievement of the component parts of an Apprenticeship which can be completed by some Apprentices more quickly than by others. Therefore, Apprenticeships should be outcome based and not time served.

18. To achieve a consistent understanding of the new policy requirements and a smooth transition from old to new requirements, Government must ensure that the implementation of these (and future) changes is communicated early in a transparent and consistent manner. To provide an example, In August 2010, EU Skills issued an Apprenticeship which had been developed following a quality assurance process and met the statutory requirements and written guidance provided by BIS. EU

Skills was advised in December 2010 that this Apprenticeship could not be funded because it fell short of additional NAS criteria which at that time, had not been formalised or communicated in any way. Funding rules should be aligned to the Specification of Apprenticeship Standards for England which must be more strategic with ownership by employers and a collaboration of interested bodies.

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

19. Yes, this funding is necessary to support UK businesses as a whole. What is more of an issue for the energy and utility sector is that government priority age groups do not align with the target age groups for our sector. Further information can be found in paragraphs 26-32.

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

20. All EU Skills developed frameworks are designed in partnership with employers following a robust consultation process with all relevant stakeholders to ensure a high quality, fit for purpose framework that meets the needs of employers and Apprentices in the job role, whilst aligning with government policy.

21. Minimum government requirements outlined in the statutory Specification of Apprenticeship Standards for England (SASE) are designed to fit UK businesses generically and not sector specific requirements which may sometimes be compromised in an effort to meet statutory requirements.

22. Issuing Authorities issue Apprenticeship frameworks in their sector against statutory requirements and a quality assurance development process. However, issued Apprenticeships are then judged against additional criteria established by the National Apprenticeship Service which determine whether they are fundable. These criteria are not employer led and have not been formalised or communicated. The role of Issuing Authorities should be extended to enable it to make a full judgement regarding what is a fit for purpose, quality, Apprenticeship in the sector.

23. EU Skills evaluates the quality and effectiveness of our Apprenticeship frameworks and measures their success in helping employers meet their workforce development needs. This evaluation feeds into EU Skills’ Apprenticeship strategy and provides evidence to influence external Apprenticeship policy where required.

24. To date, there have been no externally developed Apprenticeship frameworks in the sector. This is primarily because sector employers trust and expect EU Skills to conduct this activity on their behalf.

25. Apprenticeships must be developed around the requirements of competence in a job role. In the sector there are a range of level 2 and level 3 job roles for which Apprenticeship are the appropriate training solution. Additional level 3 Apprenticeship frameworks will only be developed if suitable job roles exist and employer demand is evidenced.

26. Government should not lose sight of the critical role Apprentices at level 2 play in the economy. Research by EU Skills [4] demonstrates the demand for level 2 Apprentices increasing from 723 Apprentices on an annual basis in 2012, to 841 in 2024. These statistics exclude waste

management, renewable energy and the supply chain and assume no industry growth. When these statistics are compared to Apprenticeship starts across the sector it is clear that the industry needs to increase Apprentice starts at level 2 to meet the acute skills gaps that exist.

27. We support the governments ambition to develop technician level Apprenticeships (level 3) as the level to which employers and learners aspire, however, government must continue to recognise Apprenticeships at level 2 which are appropriate for some job roles and have a fundamental place in the sector.

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?

28. We believe that there may scope for targeted bonuses to apply to SMEs. Government should work closely with Sector Skills Councils, employers and their supply chain networks to understand where and how properly targeted bonuses could enable SMEs to increase their intake of Apprentices, especially where this could impact on youth unemployment or in disadvantaged areas.

-10 11-49 50-199 200+

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

29. No, the current funding arrangement is not appropriate. Apprenticeship funding should not be age bound; there should be equality of opportunity for all ages where appropriate.

30. The rationale that has been provided for the 50% reduction in funding for Apprentices aged 19+ is that these Apprentices require less input to achieve occupational competence. In the energy and utility sector, the time taken to achieve competence is unique to each Apprentice and is affected by a wide range of factors of which age is just one.

31. In our sector the knowledge input can be cost intensive. To ensure quality training, providers will need to invest in a wide range of equipment to ensure Apprentices are able to practice tasks in a safe environment. This input is equally important regardless of age.

32. Whilst school leavers in the 16-18 are an important source of recruits, there are some job roles where the sector actively seeks Apprentices in the 19-24 and 24+ age groups. The reasons for this include:

a. the degree of responsibility and maturity required where individuals work alone and/or in safety critical situations,

b. age restrictions for working on site,

c. the job involves shiftwork

d. the ability to drive and

e. difficulties in insuring younger employees.

"The nature of the industry (safety first) means the we (Alstom) purposely do not recruit at age 16, or possibly even 17, due to the age restrictions for working on a site."

Alstom, 2012

33. Due to the low numbers for Apprenticeships in niche areas and current funding priority groups, cohorts of Apprentices aged 19-24 will, on occasion, be run at a loss by providers - the costs incurred passed on to the employer. To underpin succession planning, the sector requires a

 

mechanism that supports employers to recruit Apprentices in this age group. We understand that in the current economic circumstances an increase in funding may not be possible, so we recommend that government considers the incentives that can be offered. For example, reducing the cost of employment through tax breaks or a reduction in national insurance contributions.

Recommendations

34. The EU Skills Group makes the following recommendations:

a. While there clearly needs to be consistency of standards at a national level to protect the Apprenticeship brand, minimum government requirements for Apprenticeships should be better aligned to sector needs.

b. The role of Issuing Authorities should be extended to give the remit to make a full judgement regarding what is a fit for purpose, quality Apprenticeship in the sector represented.

c. Government should continue to recognise Apprenticeships at level 2 whilst developing the technician class of Apprenticeships.

d. Government to consider the incentives that can be offered to support employers recruiting Apprentices aged 19-24.

e. Government should work closely with Sector Skills Councils, employers and their supply chain networks to understand where and how properly targeted bonuses could enable SMEs to increase their intake of Apprentices.

3 February 2012