Apprenticeships

APP 118b

Supplementary written evidence submitted by the

National Apprenticeship Service

Apprenticeships in Retail

Retail is one of the largest employment sectors in the UK economy and has been identified as one that is expected to continue to grow and employ more people.

Between 2007 and 2017 UKCES estimate that over 215,000 additional jobs will have been created in retail. This sector would therefore be important in any expansion of the Apprenticeships Programme, which is increasingly being focused on new jobs.

By 2010/11 retail had become one of the top five employers of Apprentices in England. The Committee may be interested to note that the retail sector is also the second largest employer of apprentices in Germany.

Quality of provision has improved greatly while volumes have grown and success rates have doubled over recent years and are now at over 70%.

Research into Apprenticeships in retail indicate that there is a clear ‘return on investment’ for the state, even if returns are lower in this sector than in many others.

Fig 1: Net Lifetime earnings benefits, per achievement and per £ of Government funding by sector 1

1. The figures above the bars show the NPV per £ of government funding

Source : McIntosh (2007), ‘A Cost-Benefit Analysis of Apprenticeships and other Vocational Qualifications’

The funding that is paid for training in this sector is lower when compared to many others. Some examples are as follows:

Fig 2: Typical average funding rates paid for Apprenticeships in 2010/11

Apprenticeship Framework		16-18	19-24	25+
Retail	Intermediate	£4,202	£1,966	£1,573
	Advanced	£4,272	£1,998	£1,599
Hospitality and Catering	Intermediate	£5,954	£2,785	£2,229
	Advanced	£6,956	£3,254	£2,604
Engineering  (basic)	Intermediate	£9,071	£5,547	£4,439
	Advanced	£16,914	£11,851	£9,483
With a further 25% discount applied to starts at large employers (over 1,000 staff)

NB. To note rates can vary de pendant upon the qualification u s ed in a framework and the age and circumstances of the learners. Therefore these figures should be treated as a ‘guide’ only

While attention has focused on training of the existing retail workforce, this is a sector that is not only expanding but often has high staff turnover and is accessible for many who are unemployed. Many retailers have active policies of recruiting from the local area. An Apprenticeship gives the skills that help prevent the problem of people who are NEET enduring a series of short term employment opportunities. They are given the investment to motivate them to stay and be more attractive to employers and to progress in work. .

In summary, NAS believes that the retail sector provides important Apprenticeship opportunities in terms of both creating employment and also in the upskilling of low skilled workers. Large retail employers often provide vital employment opportunities to those returning to the workplace and can be the most significant employer in areas of high unemployment.

Our pricing strategy reflects the costs associated with training in different sectors and we further reduce rates significantly for Apprenticeships that take place in larger employers.

With new tighter definition of Apprenticeships, funding should only go to retail employers where there is a significant amount of new learning that is needed , especially new recruits and returners . Apprenticeships are not for those who simply need accreditation of existing skills. This is clearly set out in the 2012/13 funding rules of the Skills Funding Agency.

Morrisons

The balance of contributions between Morrisons and Elmfield to Apprenticeships

The committee asked to see the contribution of Apprenticeship training delivered by Morrisons as the employer and Elmfield as the training provider. This is set out in the table below:

Morrisons input

• Induction and continual updating – skills and knowledge for the job • Coaching and mentoring – performance in the job • Career pathways – progression through the business • Development support – positive place to learn • Training rooms – off-the-job environment

Elmfield input

• Recruitment of young people –individual assessments • Targeted pre-employment training – capability for work • Additional training – skills and knowledge for the role/sector • Coaching – confidence and motivation • Numeracy and literacy training and assessment – threshold skills for career • Assessment – competence to national standards • Certification – passport into labour market • Programme design – efficient use of resources • Quality assurance – ensuring effective use of public funds • Contract management • Administration and compliance

Apprenticeships and Train to Gain provision

The committee have heard concerns that Morrisons Apprenticeships are re-branded Train to Gain. They are of course different products, with a broader package of learning required to achieve an Apprenticeship.

Morrisons used Train to Gain to train their staff, but switched to Apprenticeships as these offered a more appropriate training and development solution to their workforce.

Morrisons staff were given the choice to enrol on either an Apprenticeship or a Level 2 retail diploma. This was a completely voluntary choice – each individual member of staff took the decision whether or not to enrol on the Apprenticeship and approximately 50% of staff on the programme elected to do so.

We have been assured that everyone who enrolled on the Apprenticeship understood the requirements of the framework, including the need to meet national standards in numeracy and literacy (which Morrisons have said was a very important skills issue for many in the workforce).

Growth in numbers

The committee heard concerns that the growth of the Morrisons programme was uncontrolled and the programme was not effectively managed by NAS/SFA.

Morrisons planned its programme in phases, with each phase consisting of staff in different departments. The growth in their funding contract was directly linked to each phase successfully meeting its targets.

There was a continuous and frequent process of contract monitoring, discussion and negotiation with NAS/SFA over performance, priorities and future plans. Audits by the SFA provider financial assurance team show a very low error rate and no issues of non-compliance.

The number of Apprenticeship starts supported by Elmfield at Morrisons in 2009/10 and 2010/11 academic year are shown below.

	Morrisons starts (delivered by Elmfield)	Total Apprenticeship starts	%
Final Year 2010/11	25,220	457,200	5.5%
Final Year 2009/10	5,280	279,700	1.9%
Overall	32,230	736,900	4.4%

Short duration Apprenticeships

The Committee heard concerns about Apprenticeships in Morrisons taking six months. The average duration has been 32 weeks which is shorter than the new expectation but not uncommon in the sector. The standard Apprenticeship in Morrisons is now expected to last 54 weeks which is in line with the Government’s new requirement that Apprenticeships take a minimum of one year.

Additionality

External reports of evidence given to the Committee state that Morrisons have said that they would have provided training without Government support. It has been made clear to NAS/Skills Funding Agency by Morrisons however that the level of training that they would have provided without public support would be significantly less than Apprenticeship training. If not, NAS/Skills Funding Agency would use public funds elsewhere where it would be of greater value.

Delivery Partner

Morrisons were offered a choice of how to deliver this project by the NAS. They could either have a direct contracting relationship (through the then National Employer Service) or use an approved training provider.

Morrisons reviewed the options and decided to appoint Elmfield as their training partner. The Apprenticeship frameworks they use (including retail) were mapped across job roles. The Morrisons Apprenticeship programme is delivered through ‘Talent Coaches’ who are employed by Elmfield and based at Morrisons stores. Each Talent Coach has a case load of around 70 apprentices at any one time.

Progression Routes

Over the next five years we expect that many of Morrisons staff will progress to an Advanced Apprenticeship or other Level 3 qualification. Morrisons are piloting a programme for 18-24 year olds which leads to a Foundation Degree and Higher Apprenticeships.

Elmfield

 

The Committee has heard evidence questioning the suitability of Elmfield to receive large amount of public funds.

Elmfield have delivered Apprenticeships for 10 years, having acted as the provider supporting direct Large Employer contracts worth several millions of pounds with Phones 4U, Vodaphone, DHL, Littlewoods, JD Wetherspoon and others during this time. They have held a direct contract with the LSC/Skills Funding Agency since 2009.

They have therefore been known to NAS/Skills Funding Agency (and their predecessor bodies) for much longer than has been implied. They have also therefore been the subject of Ofsted inspections as the provider partner of the employer contract holder before holding a contract with the Skills Funding Agency in their own right.

In order to become a contract holder, Elmfield has gone through and satisfied the Skills Funding Agency’s procurement and quality assurance process.

Elmfield deliver both 16-18 and 19+ Apprenticeships. They have also historically delivered large volumes of Train to Gain activity. The totality of this training activity was usually offered as a package to employers. They continue to be successful in securing ‘blue chip’ employer businesses.

Elmfield directly deliver the vast majority of their contract although they have registered the use of two small sub-contractors with the Skills Funding Agency.

Quality of Delivery

As an employer delivery partner, Elmfield had previously been inspected as part of large employer inspections where the outcome was overall Grade 2 on each occasion.

Their first OfSTED Inspection in their own right took place from 25-29 July 2011. The grades profile is set out below.

Summary of OFSTED grades July 2011

Overall effectiveness	3
Capacity to improve	2
Outcomes for learners	2
Quality of provision	3
Leadership and management	3
Contributory grade - Safeguarding	3
Contributory grade - Equality + Diversity	3
Sector subject areas
Retail	3
Business admin	2

A summary of the main findings are at annex A (the report was published 27 August 2011).

Elmfield have developed and are implementing an action plan to respond to OfSTED’s findings, which are being monitored by their account management team.

Success rates

As highlighted by OfSTED, Elmfield have good success rates across their programme which is well above the national averages. These are set out below.

YEAR	APPRENTICESHIPS	Elmfield	National
2009/10	Overall success rate	80.7%	73.8%
	Retail success rate	80.7%	68.7%
2010/11	Overall success rate	82.6%	76.4%
	Retail success rate	81.6%	75.7%
	Business Administration - Contact Centres	75.0%	71.1%
	Business Administration - Customer Service	85.0%	79.2%

Financial Information

Financial Position of Elmfield Training

The table below sets out the value of direct contracts with the Agency.

	Years ending 31 July
	2012	2011	2010	2009	2008
	£000	£000	£000	£000	£000
Direct contract	£41,101 *	42,818	14,607	0	0
* in year amount which could vary

Each quarter the Agency reviews the contract position of all providers and adjusts contract amounts according to performance. Elmfield were awarded 13% of the recycled adult Apprenticeship funding available in 2010/11.

As with all providers we remove funds that are not being used so that we can reallocate it to providers that are able to use it and Elmfield’s 16-18 allocation was reduced at quarter two of this academic year because they were not on track to use all of the money available to them within the year.

The employer contribution for adult Apprenticeships does not have to be in cash, it can be made ‘in kind’ therefore any contribution by Morrisons would not necessarily be visible in Elmfield’s accounts.

Financial health assessments are carried out to assess the exposure for the direct contracts, and Agency financial health assessments of Elmfield have been "Outstanding" throughout.

14 May 2012