Business, Innovation and Skills Committee - Minutes of EvidenceHC 83-II

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House of COMMONS



Business, Innovation and Skills Committee


Tuesday 17 April 2012

Martin Doel AND Tom Wilson

Nick Linford

Evidence heard in Public Questions 461-537



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Oral Evidence

Taken before the Business, Innovation and Skills Committee

on Tuesday 17 April 2012

Members present:

Mr Adrian Bailey (Chair)

Mr David Ward

Nadhim Zahawi

Paul Blomfield

Ann McKechin

Margot James

Simon Kirby

Julie Elliott


Examination of Witnesses

Witnesses: Martin Doel, Chief Executive, Association of Colleges, and Tom Wilson, Director, Unionlearn, TUC, gave evidence.

Q461 Chair: Good morning and thanks for agreeing to appear before us this morning. Could you introduce yourself for voice transcription purposes?

Martin Doel: Martin Doel, Chief Executive for the Association of Colleges.

Tom Wilson: Tom Wilson, Director of Unionlearn, which is the learning and skills arm of the TUC.

Q462 Chair: I will repeat what I always say to panels. Do not both feel obliged to answer every question as a matter of duty. If you feel that the other person has adequately covered the points you would wish to make, feel free to opt out, but obviously there will be some questions that are specific to your area of expertise. I will start with a fairly general question. The National Apprenticeship Service has sent us a long list of its achievements. According to the NAS everything in the garden is rosy. What is your view of that?

Martin Doel: I do not think that anybody’s garden is always entirely rosy. There will be some achievements that are properly ascribed to the NAS, but there will be more that needs to be done. I particularly salute their efforts at promoting and marketing apprenticeships, perhaps most effectively to large employers and at the national level. The growth is not to be sneered in terms of the increase in the number of apprenticeships, but continuing to have growth with quality is an abiding concern for all of us. The NAS needs to think in those regards. I think that the internal relationships between the Skills Funding Agency and accountability trees and chains need to be thought through a good deal more into the future.

Tom Wilson: NAS perhaps has suffered a bit in the sense that quality and quantity have been slightly opposed to each other, and the one is perceived at the expense of the other, and that is the opposite of the truth. NAS’s greatest success in more recent times has been because they have pursued quality as much as quantity, and have thereby assured employers that this is not some kind of cheap secondrate qualification that is not worth pursuing; it is something that is valuable. That is why they have been more successful over the last couple of years.

Q463 Chair: One of the accusations levelled at it is that it has gone for quantity rather than quality. You are saying that from your perspective, Tom, that they have managed to sustain quality, and are in fact are using it as marketing?

Tom Wilson: In recent times-the last year or two-there has been much more attention paid by NAS to quality, and that is why they have been more successful. That is very welcome.

Chair: Do you wish to disagree with that point, Martin?

Martin Doel: No. There has always been a wish to preserve quality, but if you have an offer where effectively you are saying, "The answer is an apprenticeship, now what is the question?" there is always the potential for undermining quality in that growth process. The NAS have been alive to that, but have perhaps given more attention to it, understandably, in the last year rather than the preceding years. I do not think that they were avoiding the quality issue throughout, but greater attention has been paid to it in the last year.

Q464 Chair: One of the accusations I have heard levelled is that it goes for soft options, if you like, the major employers, but does not deal with the more difficult areas, the small employers, issues around ethnic minority apprenticeships, and so on. Have you any views on that?

Martin Doel: There is always a tendency to go for the eponymous lowhanging fruit, and as a national agency it is an easier match for them to work with large employers. That is not a bad thing to have done; it is a right thing to have done. I would question their ability as a national agency to effectively work with SMEs in the locality. Colleges tell me they have very good links with small and medium enterprises at the local level; they know better the local markets than a national agency.

I would not want the NAS cutting across unduly what colleges do with their links with their local communities and employers within those local communities. I would not hold that up as something with which to beat the NAS over the head; it needs to work in concert with colleges and local providers in order to reach out to SMEs effectively. They have concentrated on nationallevel employers, but I do not know that that is a bad thing for them to have done in raising national consciousness of the apprenticeship offer.

Chair: I was going to develop that issue; you have partly pre-empted it. Do you wish to add anything, Tom?

Tom Wilson: To be fair to NAS, they have actually worked hard at recruiting and engaging both large employers and SMEs. Interestingly, still today in the UK only 30% of employers with over 500 employees employ apprentices. Far more than half, almost twothirds of all large employers in the UK still have no apprenticeships, unlike, say, Germany where it is literally 100%. I do not think you can blame NAS for that necessarily. Part of the issue, exactly as Martin says, is that there needs to be a much stronger partnership between colleges, large employers and SMEs, using supply chains, for example, which large employers often have with their SME suppliers, to create a network in which the large and the small can all work together through the colleges, with everybody working in some kind of partnership. That has not always worked, but it is now better than it was.

Q465 Chair: The AoC said in your evidence that, "Colleges report that they recruit most apprentices for employers directly and locally." That is backed up by evidence submitted by other bodies like the Forum of Private Business. If that is the case, what is the virtue of the NAS as a national matching service? Does it add value to that process?

Martin Doel: At the level of general awareness, yes, NAS has a substantial role to play. While the colleges will say they recruit locally through working with employers, it is very hard to establish how much of that awareness had generally been raised by NAS at the national level, and how much that plays through to the success colleges have then had working at the local level. A combination of the two becomes very effective and contributes to the overall outcome.

Clearly NAS has further roles, rather than just marketing and the matching service, and the roles in relation to quality in terms of overseeing the flows, and so forth.

Q466 Chair: Do you think there is a conflict in the role of the NAS acting as the promoter and evangelist for apprenticeships and at the same time as the regulatory body? Do you think there is a conflict and do you think it has caused problems?

Martin Doel: There is a potential conflict, and there needs to be very clear accountabilities within the agency as well as externally about which people are responsible for quality, for auditing the quality of provision, and which are responsible for marketing and generating that demand in the first place. I do not know how the NAS works internally in detail, but if I were involved in running the NAS I would want to see clear accountabilities, who was responsible for quality and audit, and who was responsible for generating the business in the first place.

That needs to be clarified. I would feel happier in some respects if, as the latest report has said, an external body like Ofsted-we might come back to Ofsted’s effectiveness or otherwise in its role of looking at apprenticeships-came in to judge the quality of outcomes for individual learners and also for employers, rather than those who market it. You can have a combination of checks and balances here, but I would have some internal checks and balances, and clarity about roles within the NAS to ensure that potential conflict does not manifest itself and affect quality.

Tom Wilson: Often when our members have raised concerns with us about quality, and very often they have, we convene meetings of apprentices themselves and talk to them about their experience, and they will tell us when they have poor quality off the job training, supervision, or mentoring-whatever it might be. We have then taken that up with NAS privately, and very often we have found that NAS does act on that, and has acted quite effectively.

I agree entirely with Martin that there are two clear, distinct roles, and there perhaps needs to be clearer or more public articulation of the way those two roles are organised within NAS and the way in which they work. I agree also about Ofsted perhaps having a clearer and more public role in monitoring quality.

Q467 Mr Ward: What is emerging is confusion about who does what. While, by definition, everybody NAS works with are apprentices, not all apprentices are involved with NAS. Therefore it becomes very confusing in terms of who is in charge of this. Tom Wilson has mentioned the restriction on the involvement of unions and SMEs in feeding into this. Should unions have a greater role in the promotion of apprenticeships?

Tom Wilson: Yes, absolutely. Our experience is that where unions are involved, employers report twice as much take-up, interest, satisfaction, quality and progression among their apprentices. Similarly the apprentices themselves, who are union members, report to us that they are much more likely to get high quality training then where they are working in a company that is not union-recognised, or where they are not members of unions, and frankly the quality and the training may not be as good.

We are strongly of the view that where there is union involvement, engagement and presence it is a powerful force for good, and that has been recognised from top to bottom throughout the entire system. Interestingly, this social partnership approach to apprenticeships, the working together of unions, employers, and Government in a tripartite way, is what underpins the enormous success of apprenticeship systems in Europe.

It is not an accident that we are taking the Skills Minister, John Hayes, to Berlin next week to meet some counterparts in the German apprenticeship system to talk about how their system works, and particularly to talk about the way the social partnership strengthens, underpins and embeds the whole success of the German model. The Government have been very supportive of that, and we are grateful to them for that support.

The reason why that works is precisely because, in a sense, you have then got a critical friend in the union agent-the shop steward, the union learning rep-who can be a voice for the apprentice, who can articulate their needs to the employer, and who is often quite sympathetic and understanding-but not always; sometimes we have to engage in some fairly robust exchanges. Where it works well, it is the best way to ensure a high quality of apprenticeship.

Q468 Mr Ward: Where has this gone wrong though, Tom? That comment could have been made any time in the last 40-odd years, and probably has been made every year for 40 years. Why do we consistently get it wrong?

Tom Wilson: I would not say we consistently get it wrong. Certainly over the last few years we have begun to consistently get it much more right. Things have improved enormously, and there should be great credit given to both this Government, and the previous Government, to be fair. The real decline in apprenticeships throughout the ’70s and ’80s was a combination of factors: changes in industry, changes in qualification regime, different Government policies, and so on. All of that then changed in the mid to late ’90s, and there has been steady progress that has helped to rebuild and re-found a new kind of apprenticeship, which is much more around the modern employment needs of the UK economy, which is different from what it used to be.

It is that different kind of apprenticeship that is now being promoted, and that is what we are a big part of helping to promote and to publicise. Key to this is persuading employers, who may still be unaware of the different kinds of apprenticeships that are available now, about the value, the quality, and the business benefits of those apprenticeships. Many employers, even big employers, are still unaware of that.

A big part of what we do as a union movement is to talk to those large employers, many of whom recognise unions and we work very closely with them, about the benefits to them of the apprenticeship service. Perhaps the biggest way in which we can play our part is by robustly engaging those employers that do not take on apprenticeships to begin to take them on, or if they do, to improve the quality of their schemes-for example, by having a longer duration, or better progression, or improved quality.

The final point I would make is that one thing we have not cracked yet properly in this country is equality and the fact that far too many young women are still excluded, frankly, from decent apprenticeships in engineering, and far too many men are excluded effectively from apprenticeships in social care, retail or hairdressing, which can be just as valuable. That is a real problem that we need to address with some urgency.

Q469 Mr Ward: Could you tell us a bit more about the union learning representatives and the role that they have in that very issue?

Tom Wilson: We have trained about 28,000 union learning reps across the entire country, which is something we are very, very proud of. ULRs are a kind of shop steward in the workplace, but their role is limited to training, to learning, to skills. As far as apprenticeships go, they will firstly go and talk to the employer about why it is so important for the employer to have a decent apprenticeship scheme, to set up a kind of training committee, to work with the union, to organise it in a way that really suits the needs of that industry and that work force.

Hopefully the employer will respond and say, "Fine, okay, let’s get an apprenticeship scheme up and running", and start to recruit apprentices, and so on. Once they are recruited the role of the ULR is then to support, literally sometimes by putting an arm around the shoulder of the new apprentice, helping them to come to terms with the world of work.

For a lot of young apprentices, this may be their first ever real encounter with the world of work. They may well need a friendly arm around their shoulder to explain to them, "Look, this is how things work here." Things like dress sense, meal breaks, language codes-simple things like that, which some young people do not know about. That is where ULRs can play an important and effective role in reassuring people, helping them, supporting them, and working with the employer to ensure that apprenticeship scheme is right for their industry and is going to genuinely help those young people to progress and complete.

The evidence suggests that where we have good, active ULR networks, which is widespread across the unionrecognised work force, the completion rates, progression rates, and enrolment rates of apprentices are far higher than where those do not exist.

Q470 Mr Ward: Do you know how many organisations would not be able to benefit from that by being non-unionised? What are the percentages?

Tom Wilson: Roughly, collective bargaining extends to about a third of the economy, so it is the other twothirds where people do not have the benefit of that. Having said that, we are working in non-union workplaces to try and help them to learn from the benefits of union learning in union workplaces, in ways that are appropriate to them. We are trying to extend the model beyond the unionised sector.

Q471 Mr Ward: What support does the AoC provide as an organisation to your members, the colleges, in terms of developing the apprenticeships?

Martin Doel: The prime role of a representative body in this regard is providing good information to colleges on emerging Government policy, consequences of funding decisions and changes, sharing best practice between colleges, and holding events in order that they can meet with one another to understand that. In no sense could I be a guarantor of quality within it, but clearly there are messages that the AoC would push to their members, the key one is delivering apprenticeships with integrity-the term we have come up with.

Colleges are in their communities for the long term. They have no interest, wish or benefit in providing lowquality apprenticeships, either to individuals or to employers, because their reputations depend on longterm relationships. They are not for profit and therefore they are not in it to make a buck; they are in it to serve their communities through what is a very strong and impressive way of learning while you are working. It is a very persuasive and strong model.

Perhaps I could just take up a couple of Tom’s points. Colleges value the involvement of unions in the provision of apprenticeships and all training, and work very closely with the unions in the Unionlearn movement, and in other respects. I have to question the point that if 33% of the work force is not unionised, and Unionlearn is not involved in 66% of apprenticeships, to imply that all the 33% are much better than the remaining 66% in all cases is perhaps fallacious. There can be some good provision that is not delivering in conjunction with unions.

Q472 Chair: Tom, you made this assertion that in effect completion rates were better where there were trade union representatives. Can you provide any statistical support for that particular assertion? Not necessarily here today, but if you could that would be very helpful.

Tom Wilson: Yes, we certainly will provide that evidence. To clarify, I certainly was not claiming that in every case this is a necessary condition, or a sufficient condition, but I think there is overwhelming evidence that where unions are present, there tends to be a much higher level of quality of progression and completion and other indicators. That is not to say that where unions are not present it cannot also be high quality, but is not quite so often the case.

Martin Doel: Can I add one further thing in relation to Tom’s evidence? We also need to beware of simplistic international comparisons. The comparison with Germany is interesting. There is much to recognise and commend in the German system, not least that in 1946 we left it a dual system directly after the Second World War, and introduced the apprenticeship system to Germany. None the less it is part of a complicated social compact, or a series of social conditions, not least a very active chamber of commerce role, which is not easily reproduced in our economy.

Moreover, while the stability within the German apprenticeship system is to be admired in many respects, the speed of change in our economy leads me to believe that some of our employers would not want to be sitting with a model that has been substantially the same since 1967. We have perhaps changed too much, but arguably the German system changes very slowly, and whether or not it will continue to be fit for purpose in a rapidly evolving modern economy is an open question.

Taking one system and trying to transplant it here, or taking the bits you like would be interesting; for instance, 16 to 18-year-old apprentices in Germany have two days off-the-job training, whereas it is only one day here. Whether or not employers here have the appetite for apprentices to be away from the workplace for two days’ structured learning each week is an open question, but we need to ask whether we are going to provide more maths and English to 16 to 18-year-old apprentices and whether or not that can be attained in one day’s time off the job. International comparisons are interesting, but they need to be approached with a health warning about how they translate into our circumstances.

Q473 Simon Kirby: Mr Wilson, I am interested today to hear about the value of the involvement of the unions, and clearly that is a good thing. Would you say that your broad support of the Government scheme adds to the perception of the quality of apprenticeships? Perception in many ways is more important than the reality. I am very pleased that you seem to be working closely with the Minister, but do you think your support adds value to the perception that they are a good thing?

Tom Wilson: Yes, I think so. Broadly speaking people do trust union views. This is, frankly, quite a complicated area, and the whole value of having union learning reps is because these are people who are trained to understand the issues. If your ULR says, "Yes, this is a good scheme", with caveats-they are not always perfect, and often there are things that need to be improved-but broadly speaking, union endorsement does carry quite a lot of weight, not just in union workplaces, but in the non-union ones too, interestingly.

Q474 Ann McKechin: As we all are aware, there has been a very rapid increase in Government funding on apprenticeship systems over the last three or four years. Last year the Government spent nearly £1.2 billion. Martin, you commented that at some point the Government will need to pay less in the future, on the assumption that employers are going to be paying more. Do you think that the current level of investment is sustainable? Do you think that the Government has a strategic idea of how it is going to change that balance? A year-on-year increase at the levels we have seen in the last few years is unlikely given where we are in terms of public finances.

Martin Doel: This is a really important time to pause for thought about how best we use the funds available for apprenticeships. I hope the amount of investment in apprenticeships continues, but how best we use that is an important question to ask at this particular point. I have a particular concern about funding and its rates. I note the earlier conversations that the Committee has had about value for money. The NAO report was persuasive in that respect, but not in the detail that we might want to get to. If I have a particular concern around funding it is around 18 to 24 apprenticeship funding rates, with the presumed 50% contribution from employers, which is not a cash contribution, but can be in kind.

There is a tendency for providers to be led into a process of undercutting each other below that presumed 50% contribution from employers, and I am aware that a number of providers -some colleges included, I expect-are providing it at no contribution from the employer, i.e. a 0% investment from the employer. That must be an incipient threat to quality. It will be cheaper, one would suppose, to deliver an apprenticeship to a 19 to 24-year-old than to a 16 to 18-year-old, but it is not 50% cheaper.

We need to get to grips with the employer contribution. I can also see it is not as simple as saying there must be a mandatory 50% contribution matched funding from an employer, because if a college is delivering large numbers of apprentices to a local employer-an example might be my president’s college in Bridgwater delivering to EDF-volumetrically you may be able to do it at less than the full 50% contribution from that employer, but you cannot do it for 0% at the same quality.

Q475 Ann McKechin: You would recommend then there would be a minimal contribution in a range? A range, say, from 25% to 50%?

Martin Doel: We need to pause and think about the most effective way to see that funding rates are effective, 18 to 24, to preserve quality. The Committee is perhaps aware of the review of fees within further education that was completed on the changeover of the two Governments, called the Banks Review; it had some sane and sensible things to say in this area, but it seems to have been put on the shelf somewhat.

It would be good to return to some of that thinking in this particular area, otherwise I think a couple of things could happen: either quality will be affected, or some providers would begin to say, "I can’t deliver at the rates employers are prepared to pay for this, so I just won’t do it; I can only do it for a certain period of time, cross-subsidise it from my other work". Then you would have a flattening off of opportunities for 18 to 24 apprenticeships, because providers cannot deliver at the quality and the rate.

Rates in this area of apprenticeship provision, as it is in all skills provision, is a very complicated matter, but it is a very sensitive market, and you need constantly to be considering what the incentives are around funding. While it makes it complicated to come in front of Committees like this to explain the very many different rates applying, if you buy into the voguish term "nudge politics", nudging in this market is important. Nudging through pricing points and behaviours, and understanding those behaviours and impacts upon quality, is a very subtle business that needs to be continuously reviewed and understood, otherwise you get threats to quality, or to sufficiency of supply.

Tom Wilson: There is a kind of catch-22 here because if a college is perceived by an employer to be delivering at only 50% of what the funding should be because other employers are not effectively paying their 50%, that puts off those employers. They can see that the quality is not, frankly, as much as it could be because it should be done at a higher level of funding, exactly as Martin said. It becomes a cycle, or rather a spiral of decline, where fewer and fewer employers then want to be involved because they perceive that the quality is not as it should be, which in turn leads to less and less funding from employers.

The issue, exactly as Martin said, is how to turn that spiral of decline into a more virtuous circle, which encourages more employers to become involved, and, above all, to start paying their 50%.

Q476 Ann McKechin: What do you think would be the key components? Is it that there has to be a minimum cash contribution by the employers? Do you think that this sudden drop-off between the 16 to 18-year-olds on the one hand, and the 19 to 24-year-olds on the other, needs to be a much more tapered solution? Or does it have to vary according to the type of apprenticeship, whether it is a Level 2 apprenticeship or a Level 3 apprenticeship?

Martin Doel: There is some room for sensible tapering, particularly as Tom was talking about the equality point. If you want to encourage certain disadvantaged groups, or groups that are underrepresented in particular sectors, then you might-I do not use the term in a trivial way-‘play’ with the funding envelopes to encourage particular groups to pursue apprenticeships, or be encouraged into the apprenticeship arena. That might be one area at the margins where you could experiment.

Frameworks are different sizes and have different rates for the job within it, so that is quite complicated. I would be slightly chary of minimum rates, but they are worth considering. Also worth considering is greater transparency about portraying what the employer contribution is to NAS, and/or others, to be a cue for looking at the quality.

If you are delivering and reporting no employer contribution, or the employer contribution is some complicated form of in-kind support, then that would be a sensible cue for looking at the quality. How can you be delivering at this rate and at the required quality? We need to go and look at it. If it is explained by volumetric economies then that might be a worthwhile reason, but again, how far does that allow you to offset the presumed contribution?

Selected groups and tapering, yes; adjusting the rate from a 50% presumed down to 40% presumed; and also greater transparency to say what the employer contribution is as a cue to investigating quality.

Q477 Ann McKechin: Last month, you may be aware, we spoke to the owner of the training provider Elmfield, who provide training to Morrisons among others. It made very, very large profits in the last few years and the owner was paying himself millions of pounds out of the apprenticeship grants system. All the funding for his company was purely from the public sector. There has also been a recent Panorama programme, which shows that this is not necessarily a one-off experience. This is clearly what concerns us about the reputation of what apprenticeship systems are, and problems like these will cause people alarm. Do you think these are just a small minority, which the Government is now tackling effectively, or do you think that there are further measures the Government needs to put in place to measure its own success in terms of its impact on public funding?

Martin Doel: We need to keep things in perspective. My sense is this is at the margins of the provision. The great majority of provision is high quality, good value for money and benefits both the employer and the individual. It would be good to have some better statistics to demonstrate how much of the total percentage short apprenticeships are so we can establish a sense of perspective.

I can only say, in terms of colleges, that I do not see many college principals making £3.5 million either to put into their own pocket or as a surplus to put into their wider work. I cannot see colleges extracting that much profit from the system. I go back to the same guarantee on what colleges do. They have no interest in providing poor quality for individuals, for employers, or for their communities, because they will be there for the next 50 years working with those groups. There is no integral interest.

There are some different imperatives working with the private sector in this area, and NAS and others need to be aligned to the other imperatives that might work with private training providers.

Q478 Chair: Some of the evidence for this has come from colleges. What would be the best way of arriving at some sort of figure for the number of short-term courses? Could colleges do this, or have you any other advice on how these statistics could be compiled?

Martin Doel: Colleges could not do it, because colleges would only be able to report from their own provision or that of their subcontractors. NAS must be in a position here. They are concluding funding agreements and they are maintaining the individual learner record on all the students within the system. I cannot see that it would be beyond the wit of man-

Q479 Chair: NAS should be able to get a picture?

Martin Doel: I probably got to about Level 2.5 on my understanding of the data and funding systems within further education, but I am working very hard towards my Level 3. It seems to me that, from all I know, this is not a data-free sector; it is a question of interpreting that data, and putting the data sets in ways that can be presented most effectively.

Q480 Mr Ward: While we are talking about the employer’s contribution, does the issue of additionality, or not additionality, give you any concern?

Tom Wilson: Sorry, what do you mean by additionality?

Q481 Mr Ward: Well, basically, that they would have done it anyway.

Tom Wilson: Sorry-deadweight and all that. Yes, absolutely, enormously. I would agree entirely with everything Martin has said about the kind of practice that was revealed by Panorama being broadly at the margins. But it can very quickly become a major problem, because even if it is at the margins, if that becomes something that your competitor is getting away with then you have got to do the same, otherwise you are going to get driven out of business. You have to deal with it very quickly and effectively to stop it spreading quickly from the margins and becoming a much bigger threat.

On the deadweight point; yes, the issues around Train to Gain, and the 50% that the NAO found, were real. Those are big issues for us. Again, I come back to the union point, because where unions are engaged and active with employers, we are able to persuade the employer to do more than they would otherwise have done anyway. That is by far the best way, in our experience, of making sure that there is at least minimal deadweight. If you do not have an organisation like a union working with the employer in that way it becomes much harder. It is not impossible, but it becomes much harder to avoid that amount of deadweight.

To be fair to Morrisons, it was interesting that the Panorama programme was about Elmfield much more than about Morrisons. Morrisons have a good relationship with USDAW, the retail trade union, and USDAW is working hard with Morrisons to try and avoid the deadweight problem and make sure they were doing better than they would otherwise have done.

Chair: When we had Elmfield and Morrisons here, that was a point that we tried to bring out.

Q482 Ann McKechin: Martin, it is generally agreed that proper preapprenticeship training is an important factor for success, because many of the youngest apprentices have never been in a work situation before. In your survey you found that only 7% of pupils are able to name apprenticeships as a post-GCSE option. What recommendations would you make to the Government to try to improve that situation and really show the viewer, or the public as a whole, that apprenticeships are a credible alternative to higher education?

Martin Doel: Both our survey and the recent Ofsted report in this area are instructive. First, we need to think clearly about advice and guidance as young as 14, not just at 16, not just at 18: an effective careers advice and guidance service being presented to young people. We are concerned about the approach of the Department for Education towards careers advice and guidance, and our survey bears that out, about the knowledge within schools of apprenticeships as an alternative.

Q483 Ann McKechin: This is a step, as I understand it, where the careers service has been downgraded and schools themselves have been made responsible for this?

Martin Doel: Exactly so. Although statutory guidance has just been issued, we are not sure about the means by which compliance with that statutory guidance will be observed. More broadly, I talked about having a pause before we open the next chapter on apprenticeships, and actually celebrate the chapter that is just closing as a success, notwithstanding that at the margins there are some issues to be dealt with.

There is a further chapter we now have to open up, to see this as a comprehensive offer from pre-apprenticeship through to post-apprenticeship. At the back end of this, there are a larger number of Level 3 apprentices now completing their course of studies. What next for them? Higher apprenticeship has a role in this, universities recognising the value of what the Level 3 apprentice has completed, and what might be open to them as a traditional higher academic route, and also as a higher apprenticeship.

What is the Level 4 or Level 5 progression here? A couple of years ago, 50% of Level 3 apprentices said they wanted to carry on for further study. Only 6% of them did. The University of Greenwich has said it has got better, towards 15%, but there is a substantial number that do not. That is one end of it. We also need to think comprehensively about how we get people ready to undertake an apprenticeship more effectively, particularly if you see apprenticeship as a way to reach out to those who are most likely to become unemployed or are unemployed, to get them to the stepping-off point to be attractive to an employer. Integral to an apprenticeship is that you have to be attractive to an employer to become an apprentice.

The pre-apprenticeship offer and the post-apprenticeship offer need to be thought about, followed by the provision of good advice and guidance. Then we would have a very persuasive offer, which would be a parallel vocational route, of equal stature, standing and value to a higher education traditional academic route. At this stage, we need to think about how we get people into an apprenticeship, and what we do with them after Level 3. Where do we go next?

Q484 Mr Ward: Do you see the work experience element of the Youth Contract as making a positive contribution?

Martin Doel: I do. I have to say the Youth Contract seems to me to be a collection and collation of a series of initiatives. There needs to be much more work done in stitching together these various initiatives into an offer that is easy to portray to young people, and easily understood by employers. It is almost a flurry of activity, which you would expect to be the case in the face of disturbing unemployment figures, particularly youth unemployment figures. Joining up the offer is pretty much what I am saying about the apprenticeship offer. It needs to be joined up, clear, and as clear almost as the academic offer. That is ingrained. Most parents understand it, most young people understand it. We want to be flexible about the offer to young people, but we also need to have one that is joined up and progressive.

Q485 Mr Ward: Can I ask you about the 7% figure, which is dire, really, in terms of where we want to be. What does that mean? There is also the figure of nearly 37% who do not know about A-levels. Surely that is not true?

Martin Doel: If you asked any group of 14-year-olds-my own 14-year-old-I think you would get some interesting answers to your questions and challenges to your assumptions. What it does say to me is, yes, the A-levels tells you something about the amount of information in front of 14-year-olds, and how much they are thinking about it. It particularly says to me that the people that are advising, or have been advising, 14-year-olds have little personal knowledge of what an apprenticeship is, how it will be completed, and what those alternative routes are. They predominantly, without being too dismissive, will have progressed through an academic route themselves, or recognise and understand that route, and are able to explain it to young people more effectively than a route that they have not followed themselves.

How you increase the knowledge of schools, and those that are advising within schools is a live issue. The move towards colleges recruiting at 14 is a very interesting development-to integrally give young people the opportunity to follow a vocational route-but it only displaces it one step further. Understanding what a college has to offer at 14 becomes an issue of explaining to the 12-year-old that this might be a route for them. One way or the other we have got to have a better sense of information for young people to make choices.

Q486 Mr Ward: Everything that we are doing is about the information made available to young people; we are seeing that time and time again as being a huge shortfall.

Tom Wilson: We have worked closely with the teacher unions. All three major teacher unions are very keen that their members deliver good quality careers guidance to all of their pupils, including about apprenticeships. What they tell us time and time again is that they are actively discouraged from doing so by the senior management in the schools, who will tell them that if they start having lots of their best and brightest pupils going off to do apprenticeships, rather than going to sixth form, they will suffer in the league tables. That is the big issue.

Martin is right, many schoolteachers do not necessarily have a background that makes them comfortable and understanding about apprenticeships, but the big issue is that structurally schools are discouraged from doing this.

Chair: We have had evidence of that on the ground.

Q487 Simon Kirby: Improving the information available to our young people is clearly a live issue in schools. How do you think the Government should improve a thing that is clearly missing at the moment?

Martin Doel: The all-age careers service has potential to be transformative, but it is going to have to be given access to schools, or access to those services has to be extended to schools. There is competition for the student between colleges and schools. If you had a schools representative here he would say that colleges were marketing machines that were voracious in trying to attract the student. I think that would be wrong, but I do think colleges sitting at the centre of their communities could have a strong potential role to act as career hubs in order to find a route of study for young people, giving them the opportunity to interact with a college. It goes to the work experience prior to apprenticeship issue that Ofsted identified. Colleges have a live and large amount of contacts with SMEs and employers in their local areas.

I am keen to develop the idea of colleges as community hubs generally, but also as community careers hubs where people can find a range of options to go forward. Pretty much all careers staff in colleges are Matrix standard in impartial advice and guidance, and correspond with external standards. There is a very strong role there. While I am very conscious of not broadening the Ofsted remit unduly, I think Ofsted also has a role to play in terms of vouchsafing. They are looking at the outcomes for young people if they are looking at advice and guidance. Sir Michael Wilshaw has said that is a critical thing for Ofsted to look at, and I would encourage them to look at it as they are going around schools in order to continuously improve what is on offer.

Q488 Julie Elliott: Both of you have mentioned inequalities in apprenticeships in your written evidence and this morning. Would you outline how you see that as a problem, and why do you think that inequality has manifested itself in the publicly funded part of apprenticeships?

Tom Wilson: This is a big and important problem, and it does not get anything like the attention it deserves. NAS is now beginning to do much more on it. In a way that is very, very welcome, but it could have been done many years ago. If you look at the employment pattern generally, occupational segregation-the concentration in apprenticeships-stands out astonishingly.

For example, if you take engineering, where something like 8% of all engineering apprenticeships are women, and you translate that into thinking that this is the cohort of people who are being trained for the next 10, 15, 20 years, it bears no relationship whatsoever to the employment profile that this country needs to have to succeed as a productive economy in 20 years’ time. We have got to do something about it now.

It is almost no exaggeration to describe these as islands of apartheid where segregation stands out in these pockets of apprenticeships in a way that it does not anywhere else in the whole employment field quite so starkly. I am not suggesting that apprenticeships would bear the entire weight of restructuring the employment work force-that is far too much to expect-but they could do a lot more. If you think about the next 20 or 30 years and the profile of employment we ought to be aiming for in that period, what we need to train now is closer to 50:50. That is not just in engineering; it is retail, social care, and so on. If you take hairdressing, it is a well-known stat that only 7% of all hairdressing apprenticeships are boys, and so on.

So what do you do about it? Our view is that you need to tackle this on many fronts. Firstly, do some good research to find out what the key problems are. A lot of that is about identifying the pockets of unawareness among many employers about the potential remedies. Secondly, tackle some of the practical issues. It is surprising, but still true, that we come across cases where employers say, "We are delighted to take on young women", but they do not have separate changing facilities, separate toilets or separate uniforms. Basic stuff like that still happens.

As Martin was saying earlier on, you need to talk much earlier, when people are 12, 13, 14, about the advantages to young women of thinking about engineering as a potential career route, because of the pay, the conditions, the career prospects, and so on. Far too many young women simply do not know about that. When they do know they are very interested, in our experience. Conversely with employers, we need to do much more to get them to advertise apprenticeship vacancies much more widely. Many SMEs may use the traditional route of word of mouth, or spreading news among family and friends about an apprenticeship vacancy. That is not likely to be reaching different sorts of people than have come through in the past.

If you take the fire brigade service, where many years ago they took active positive steps to advertise much more widely in a wider range of potential markets, it transformed the nature of the fire service. There are far more women and BME members working in the fire service than there used to be, and that is the way they did it. By tackling it on all those fronts that is the way in which we can begin to make some serious inroads. It is not just about gender or race; it is also about disability. The evidence is that the proportion of apprentices with learning difficulties or disabilities is declining. The data on that are very weak, it is not clear necessarily whether that is the case, but we need to do something about that, not least to start collecting better data.

Martin Doel: Tom implies that there are deeply embedded gender stereotypes and other stereotypes, and apprenticeship provision suffers in the same way as many others do, but perhaps more starkly in many sectors. There is the general sense of modernising the perception of young people and their parents, about what an apprenticeship is in the 21st century, and what is involved in an engineering apprenticeship in the 21st century.

I think sometimes people have this warm and fuzzy perception of an apprentice being somebody in an overall, probably with a welding torch, in a great big foundry in the 1950s, going home with a flat cap on their head. It is immensely comforting, and we remember it when we were children; some people went off to do those things, and I went off to university. It is a bit different from that and we have to begin to tell people that an apprenticeship in the 21st century is different generally. It is different in gender relationships and gender assignment to particular apprenticeships, and we need to work concentratedly towards that.

I do think also, at the margins, there may be some room for pricing incentives around apprenticeships for particular disadvantaged groups and those who have been disadvantaged in the past. It is not about social engineering, but rather about encouraging behaviours around particular groups if you want to change that.

Q489 Julie Elliott: In what way would you have pricing incentives?

Martin Doel: If you were working with a young person aged 18 to 24, who has had a history of disengagement, it might be more expensive to get that young person to the starting point, and also to succeed on their apprenticeship framework, than working with a highachieving young person who has been aiming to be an apprentice for many years. That could sensibly be reflected in the rates for the job. There are some disadvantaged groups, a bit more troubling and difficult territory to be in, but there could be some funding enhancement rate in those areas.

You approach something close to social engineering here, which is difficult ground to get into. However, as I was saying before, in this market, although people work with integrity, their behaviour is to some extent shaped by funding incentives. As well as the proselytising that Tom was talking about, which I fully support, there needs to be some acknowledgement of, and perhaps some attention given to, funding rates for particular groups. It would be worth particularly looking at disadvantaged groups.

Q490 Julie Elliott: In terms of getting young people interested in apprenticeships at an early age, obviously for engineering, for instance, the subjects you excel at and the subjects you choose when you are 13 or 14 are very important. Have you any ideas about how you encourage the importance of taking certain subjects with an apprenticeship route as a goal?

Tom Wilson: Being trade unionists, we are fairly pragmatic and hard-nosed about this, and pay is a big incentive. When you tell schoolchildren, "You are going to get paid twice as much by pursuing this subject or career route than by going into hairdressing", it can have a pretty salutary effect on their career choice. It also has a big impact on the parents, because once parents realise there is a genuine potential open route for young women to do something which perhaps they had never thought of-and, by the way, it pays much better and is going to give you a much better job at the end of it-they can be a very powerful influence on their children’s career choices. But you have to do that really early; 12 is almost too late sometimes. You have to get people thinking about their choices from first year secondary. That is one thing you can do.

The other thing would be to encourage much more employment and education interaction. At the moment, work experience and employer engagement in schools is, frankly, patchy and a bit rudimentary. It often happens too late when people are 15, 16, and 17 and have made their career choices.

If there was more and earlier employer engagement in schools-even at the most limited level of somebody coming in and talking to a bunch of children in the first year of secondary about what it is like working in engineering or something-that can have a positive effect, because it makes it more real somehow. There are a variety of things that you can do, but it has to happen early. That is the key point.

Martin Doel: We need to think about a lagging effect here around STEM and the promotion of STEM generally within schools and colleges. As a result of the action of the previous Government and this Government in prioritising STEM, you are going to see a group of young people coming through with improved STEM awareness, STEM abilities, or STEMrelated achievements. Your point is very apposite. Hitherto, that has been with a view to a route to higher education and academic study. I do not think we have done as well about translating that greater awareness and achievement toward apprenticeship provision around STEM, which is an obvious thing to do. It is something that bears greater thought and attention.

Q491 Margot James: Mr Wilson, you said a lot in your written evidence about the quality of apprenticeships, and we have discussed that this morning. Do you think that the quality of apprenticeships has been undermined by the focus on increasing their numbers?

Tom Wilson: There was certainly a perception of that some years ago. I think that perception is less than it was. Certainly in the last year or two, things have improved markedly, and credit to NAS for doing that. They have now focused much more on quality. As I was saying at the beginning, they have also tried to overcome the perceived conflict between quality on the one hand, and quantity on the other. All the evidence that we have from employers is that the two go together: if you improve the quality you will improve the quantity; you will improve the appetite and demand for employers, which is the key point here.

Quality, as Martin was saying earlier on, is something that is not measured well enough. The evidence on it-the data-is still rather poor. We have proxies in the form of duration, or completion rates, or possibly progression. When we talk to our apprentice members about the quality of what their learning experience is, they talk about things like the quality of mentoring and supervision, what goes on in the workplace, often much more than what goes on in the classroom at the college, or in the college provision, which can often be at the workplace. It is as much about their employment education experience as their classroom education experience. Measuring all of that, and improving understanding and transparency around that, is very important to raising quality in a much deeper sense.

Q492 Margot James: You said that only one third of apprentices who complete Level 2 go on to do Level 3. I think you mentioned that regulation might be a way of solving this. Could you expand on that or any other suggestions that you have for getting more people up from Level 2 to Level 3?

Tom Wilson: Regulation is something that nobody is terribly keen on, because it sounds like bureaucracy and red tape. I go back to the problem that if your competitor is doing something much more cheaply than you, then you are going to be driven out of business unless you follow suit. There has to be some sort of level playing field and some sort of regulation of some kind, which establishes a framework of expectation, as there is in Germany. As Martin said, you cannot just import different models wholesale, but we can learn from other countries. One thing that Germany has achieved is that sense of cultural expectation: this is what employers should do. They do it over decades, and I am not saying we would achieve the same overnight.

The way in which you do that is by encouraging employers through a mix of light-touch regulation and procurement. One thing that could have an enormous effect would be using tax relief. At the moment, something like £5 billion-worth of tax relief is given to employers to subsidise and encourage their training, on which we have almost no data. If we used that much more effectively to target it to those employers who are providing high-quality apprenticeships, then you could get much more value for the existing money. This would not involve any extra expenditure at all, but would be more value from the existing money then we currently have. It could be a mix of all those things: procurement, tax relief, some sort of levy framework.

One final thing that might make a big difference is simply encouraging employers, large and small, to include in their annual reports some kind of statement about what they did on training, including apprenticeships, and the proportion of apprentices who went on to progress to Level 3 and beyond.

Martin Doel: The way we are looking at quality and expansion is very British. You could say that it has been remarkable that we have achieved this degree of expansion in the time, with the quality that we have maintained. The threat to quality over these last two years, in that degree of rapid expansion, is very significant. Historically, we will look back it and say that to have maintained the degree of quality that has been maintained represents an achievement. You need to beat yourself up to make it even better going forward, but we always look at this on the deficit side in the nature of making things better.

The other thing about Level 2 to Level 3 is that our evidence says not all sectors value or need a Level 3 qualified work force. Therefore, getting a student to the end of Level 2 and implying that they must go on to Level 3 when there are no jobs requiring those up-rated skills is an open question. You would hope in a value-added economy that you want to add value through a more skilled work force, but there is an issue of under-employment against qualifications as well, which is present in some sectors. It is not a simple thing to say that everybody must progress from Level 2 to Level 3 in all sectors.

Q493 Margot James: You have answered my next question, which was going to be whether you thought it was appropriate to encourage every apprenticeship in every sector to have Level 3 as a benchmark.

Martin Doel: I think we need to be a lot more subtle than that. The thing I would add to Tom’s piece about Level 3 progression in some sectors-the Government have spoken about this-is about having licence to practise. An area I might look at is perhaps the caring industries, particularly caring for the elderly. You would want the most professionalised work force that you could achieve, but it is traditionally a low-paid work force.

The wage gain for moving from Level 2 to Level 3 is perhaps not great. The imperative for employers is perhaps weak in this area, so some form of licence to practise in some sectors might be a way in which you could generate extra training. Regulation is unwelcome, but the Government has a role sometimes to promote aspiration and improve the competitiveness of the nation overall.

Q494 Margot James: Do you think the Government are right to stipulate that all apprenticeships should be of a 12-month minimum duration, apart from 19-plus where they have got prior attainment. I think you have touched on this before.

Martin Doel: The Association of Colleges is comfortable with 16 to 18 being a 12month minimum in all cases. That is absolutely right with a young person to embed their learning as well as demonstrate things like getting into good work habits and good working relationships, and there is an amount of embedding the skills in the workplace. Absolutely, for 16 to 18. We are also comfortable with a presumed 12-month period for all other apprenticeships, and only by special exceptions that it will not be the case. Twelve months seems to me to be a reasonable period to alight upon, but it should not, as Tom says, be an absolute proxy for quality, because it is more subtle than that.

Q495 Paul Blomfield: Twelve months is the minimum contract, but at every level? For example, I was talking to the Association of Accounting Technicians recently, and they have introduced a 14-month minimum, but multi-level, framework. You said special exceptions, but could you elaborate on that?

Martin Doel: Up to 18 it is absolute. From 19 to 24, it could be either by exception for the individual, or by exception by the sector. A colleague in the audience is from my former background, the armed forces. The Royal Marines have a very concentrated training regime, which is almost 24 hours a day. Therefore, completion within 12 months might be possible in some circumstances. Having a presumption of 12 months is the right thing to do, and if the Association of Accounting Technicians wants to have a conversation about a particular qualification, they need to make that case for an exceptional treatment. Any sensible rule has got to have room for some exceptions, but it has to be the exception rather than the norm.

Q496 Margot James: I want to conclude by asking about apprenticeships over the age of 24, and paying full fees, often having to take out a loan. Do you think this will affect demand?

Martin Doel: I honestly do not know. Anybody that tells you they do know can’t know.

Margot James: Do you have a view Mr Wilson?

Martin Doel: I have seen some market research recently, which challenged my preconceptions about this. My preconceptions would have been that, no, it would have put many people off, and it would significantly drive down demand. I think it will have an effect on demand. From that market research recently completed I am not now nearly so sure about this.

Q497 Margot James: Right. What was that market research?

Martin Doel: The market research was recently completed by BIS and is about to be published. It was not conducted predominantly on apprenticeship candidates, but on over 25-year-olds generally and their willingness to take a loan to complete a Level 3 qualification. There is obviously a dimension with an apprentice being employed. You could almost present this as the apprentice paying for the employer’s training, benefiting the employer by taking a loan out.

If we have a Minister for Further Education and Skills who likes going back to his history, there could be an indentured labour perception here. It is not as stark as I thought it would be, and we need to think it through.

Q498 Chair: Could you provide us with evidence, or the evidence you have?

Martin Doel: I hope I have not put BIS unduly on the spot, but they shared with a sector group yesterday the outcome of some market research they have been completing, and I am expecting that to be open source to me. I clearly would think the Committee would have access to that market research.

Tom Wilson: Our evidence is that there will be universal horror at the idea that apprentices who currently are doing an apprenticeship paid for by the employer will start having to pay for that themselves. There is a real distinction to be drawn between that group, for whom the idea of taking out loans and paying for something that previously was routinely paid for by the employer, if you like, versus another group where there may well be some interesting demand, which is the unemployed.

People who are 24-plus, who fancy their chances of training as a plumber, currently have to pay out of their own pocket to do a Level 3. The idea that they can now take out a loan and repay it over time might well be attractive to people like that, but that is different from the traditional apprenticeship. We have not done detailed polling on this, but the impression we get talking through the union movement, talking to people who themselves talk to apprentices and talk to employers, is that nobody wants this. Employers do not want it and apprentices do not want it. It really will not work.

Q499 Paul Blomfield: I want to look at how we effectively address the development of apprenticeships in the SME sector. It is something we touched on earlier and we have come back to it time and again throughout this inquiry. I note that you both have different views on the models that might enable us to address this. Tom, on what basis have you criticised the ATA model, which is sponsored by many colleges, and seems to be growing quite significantly?

Tom Wilson: Why do we not like it?

Paul Blomfield: Yes.

Tom Wilson: Fundamentally because it is not a genuine employment relationship. It is a device that is being used to create the impression of an employment relationship. That is, frankly, in our view, something that is antithetical to the fundamental idea of what an apprenticeship is all about, which is that you work for an employer, not a group of employers or people getting together, and that that employer, when you have completed the apprenticeship ideally takes you on, and gives you a full-time job.

The ATA model is much more like an agency, frankly. It may be perfectly valid in its own terms. It may well be helping people who otherwise perhaps would not gain an apprenticeship, or it may more likely be encouraging some employers who might otherwise feel reluctant to take the risk, but in our view the price of doing that is that you damage the brand.

We have so many examples that we have come across through our networks with unions, of ATAs that have provided, frankly, not very good quality-not all, some are better than others, but where the ATA model has not served apprentices that well. They may have achieved their apprenticeships, but they have not got a job afterwards, or the quality of their training has not been that great; or in effect, what they have been doing is working for an employer, not rotated around a group of employers, in the same way as if that employer could have taken them on properly as we would have argued they should anyway.

That is why we much prefer the GTA model, where the employment relationship is with that particular employer, and you effectively pool the training, but you do not pool the employment. That is something of fundamental importance, because once you start pooling the employment relationships and damaging the employment relationship, you are damaging what is at the heart of the notion of an apprenticeship. It is no longer an apprenticeship if it is effectively something that is just an agency.

Q500 Paul Blomfield: My instinct is to agree with you, and to embrace the arguments that you are advancing, but the discussions I have been having with small employers in my area suggest that the GTA model is not sufficiently flexible to accommodate all their needs. When you look at the reports that the FSB and the BCC have been producing, about what are the barriers to apprenticeships with small SMEs, they say that they cannot offer sufficient time. I accept that the GTA model covers issues and worries about training. It is about the whole risk of taking on one person in a very small employment environment. It is also sometimes about looking at it from the apprentice’s point of view. One very small employment environment is not able to provide the diversity of experience that would consolidate training in the trade. Do you not think those are real issues?

Tom Wilson: I do, absolutely. I am not claiming this is simple or clear cut, and there is an overlap between the best ATAs and GTAs. There are also issues about sectoral spread, where ATAs can work on a much broader basis than some GTAs, because GTAs are more sectoral than ATAs, and so on.

However, I would argue on the other side that for every small employer, with perhaps a handful of employees, that says, "I cannot afford the risk and therefore I am going to have to go down the ATA route", there will be many other such small employers, exactly the same, who do take the risk, and are prepared to take on an apprentice in the time-honoured fashion, and work very well. What do you then say to them? Why are you allowing some dilution of what the apprenticeship brand stands for in one group, who are not prepared to take the risk, rather than championing what should be the gold standard, and making sure that everybody does take that risk.

This is not to minimise the risks that small employers feel, I do understand that; but there are many other ways in which you can help SMEs to put a toe in the water, and explore what it means to take on apprenticeships, perhaps take away some of the administrative back-office difficulties and bureaucracy that they are often most concerned about. That is what ATAs do very well at their best-take away all that, and do that for the SMEs. Fundamentally, our view is that you have to have that employment relationship with the employer.

Q501 Mr Ward: On the ATAs, is it not a question of one or t’other? Within the labour market there is a very large pool of agency workers who are going from one job to another on a short-term basis with no personal development, let alone career development, and the ATA model does seem to offer an opportunity for development while going from position to position.

Tom Wilson: In our experience it simply does not work that way. It is true that there are many agency workers in the economy; we would argue, far too many. As you say, very many of them receive very little training. The ATA model does not really meet their needs. The ATA model is for a different group of employees, often young people, who are just embarking on any kind of employment relationship of any kind, whether it is short-term agency work or anything else.

There is a genuine conundrum here. If, on the one hand, you took away all ATAs, and that meant that group of people had nothing, it would clearly be a very bad thing. We would have to find some way of ensuring that other models were put in place that did provide a decent genuine employment relationship. I am not claiming this is simple.

Currently you have the danger of ATAs that are pretty variable: some are not bad, some are much worse than others, but there does not seem to be enough real inspection and rigour about how well they work, and certainly not enough transparency to the young people themselves. We have found that a lot of people on apprenticeship schemes do not even know they are being employed by an ATA; they do not even realise that an ATA is effectively, in law, an employment agency, not an employer. It is not all ATAs-I do not want to claim that they are all as bad as this-but many ATAs do not properly tell their own apprentices what their employment status genuinely is. There a lot of fog around all this, and not enough transparency, clarity, or standards, which would help to distinguish good practice from what is, frankly, undermining good practice elsewhere.

Q502 Paul Blomfield: Would your concerns be addressed by a mixedeconomy model in which there was more regulation and oversight of ATAs?

Tom Wilson: To some extent, perhaps. But I think that more regulation and oversight would begin to undermine what ATAs were all about. What would the regulation do? There would have to be regulations about, for example, the proportion of time an ATA spent with an employer, the genuineness of that employment relationship. You would have to capture that in some sort of regulation, and as soon as you start doing that then they begin to look much more like GTAs.

Q503 Paul Blomfield: Martin, you are an advocate of ATAs.

Martin Doel: It is interesting; Tom has shifted a bit. We have had lots of conversations about that, because our evidence indicates that we have different views around it. He might say that some are not as bad as others; I say some are good and some are not quite as good as others. It is a different approach to the same thing.

On the points you note, I think ATAs have a strong role to play with SMEs. When the first ATAs were set up, they were substantially taken-notwithstanding my problem about international comparators-from an Australian model. They were particularly set up for a London market where there are a number of micro-businesses working on short contracts, where the employer did not feel sufficiently sure about the future of their contracts and their ability to be able to take on an apprentice, in order to both employ that apprentice long term, but also to complete their apprenticeship framework. You had a number of people that would be interested in taking on apprentices, but not wanting to take that risk, so there was an element of de-risking the process.

There was also, as Tom alludes to, the issue about the bureaucracy attending an apprenticeship, necessary reporting, and all the back-office functions that a college or another provider could meet. It grew from the London area, and there have been a number of other examples now set up.

When I talk about the London area, I see a complementary role for GTAs and ATAs. GTAs predominantly serve a sector of industry-a group of employers working in a similar sector. I see an ATA serving a place, an area, working with a range of SMEs in order to support them to make an apprenticeship offer. Done well, as Tom says, it is a very powerful model. It was set up as a concept about two years ago. Clearly we are in the process of learning what makes it work in the best way. In terms of regulation, they are perhaps not there in regard to sharing best practice and oversight in order to continue to improve the model. That is something worth looking at, but I do think there is a role for both GTAs and ATAs, and particularly for small employers it is a very persuasive model and a very useful model to use.

Q504 Paul Blomfield: When we talked to one large employer of apprentices, Carillion, we were impressed by how successfully they had engaged SMEs in their supply chain in taking on apprentices. Do you think, Tom, there are lessons that the Government can learn from that experience when looking at future public procurement?

Tom Wilson: Yes, very much so. We have argued strongly that what the sector as a whole should do is what the construction industry has done, and have a rule of thumb, which is for every £1 million of contract you have one apprentice. The construction industry is a special case with contractors, subcontractors, and sub-subcontractors. All the way down that chain that rule generally applies with good employers. If you talk to Kier, Willmott Dixon, Laing O’Rourke or people like that, they will apply that rule.

That is something that applies in the private sector just as much as in the public sector. When Nissan established their plant in the north-east, in Sunderland, they were horrified to find that many of the small employers were not providing adequate training. They could provide good quality at that time, but Nissan was concerned about the longer-term relationship. Where would they be in 20 or 40 years time? Were they training people to continue that? Nissan, of course, is famous for having long-term relationships with its SMEs.

Our view is that a very important route to encouraging SMEs to provide good quality apprenticeships is to use a supply chain model, engage the mother companies at the top of the supply chain, get clear agreements with them-either through the public sector and its £200 billion-worth of expenditure each year, or through private sector models in the way I have described-and ensure that that is followed down through the supply chain. Where that works it works very well indeed. Nissan have found that people then compete in the quality of their apprenticeships to become part of the Nissan supply chain. It has become a driving force for improving apprenticeships more generally in that part of the economy.

The previous Government made some limited moves in this direction to try and encourage public procurement to have these kinds of conditions attached. The current Government has looked at this, but has not yet come to any conclusions on it. Our view is that this is something that should be strongly encouraged, both for the public sector and for the private sector, and where some of the larger trade associations, like the Engineering Employers Federation, or some big trade associations in pharmaceuticals, would themselves strongly encourage it. This is what SSCs do in a sense. It would help to encourage that sense of a framework of expectations, which we were talking about earlier on, so that the norm becomes that everyone then plays their part in the future success of that industry and it becomes established that that is what good employers do-if you want to succeed in this sector then that is the route to success.

Chair: Thanks very much. That concludes our questions. I would add, as I always add, if you feel that there is a response that you did not give, but would like to give subsequently, please submit it in writing. Equally if we feel there is a question that we should have asked, but did not, we may do the same to you and would welcome your constructive response. Thank you very much. That is incredibly helpful. We will be reporting in due course and that will incorporate some of the comments and observations that you have made. Thank you.

Examination of Witness

Witness: Nick Linford, Author and Managing Editor of FE Week, gave evidence.

Q505 Chair: Thank you very much, and thank you Nick for agreeing to address us. If you would just like to introduce yourself for voice transcription purposes?

Nick Linford: Yes. Hello. My name is Nick Linford, and I am Managing Director of Lsect and Managing Editor of FE Week.

Q506 Chair: Thanks very much. Nick, I know you are a person of very strong opinions. We are running slightly over time, so without wishing in any way to curb the points you might wish to make, if you could just make them as briefly as possible I am sure the Committee and everybody else would be grateful.

Apprenticeships have been with us for an awfully long time. There has been a huge increase in the last few years, and, of course, commensurate with that is the level of funding. In general, are you encouraged by this or not?

Nick Linford: Absolutely, in general, I am very encouraged by it, and I note that one of the key elements within the Committee is to look at whether the extra investment in apprenticeships is being spent wisely. The key investment here, as quoted from the grant letter to the Skills Funding Agency back in June 2010, was the £150 million additional investment to deliver, "50,000 additional Apprenticeship places focused on SMEs". That was the very clear steer in the letter from the Minister, John Hayes, to Geoff Russell, the Chief Executive of the SFA.

Looking back now, a couple of years on, they have been incredibly successful. In fact, it has not been 50,000 additional that we have had last year; we had 177,500 additional. That is fantastic. If you take NAS as a sales force-Simon Waugh, who was at the time the Chief Executive, spoke to the Public Accounts Committee and was very clear that they are a sales force, marketing-that is a fantastic achievement in terms of those headline numbers.

As an adviser on funding for a good 10 years, having published quite a successful book about funding, and now producing a newspaper that was first to report on some of the issues associated with this extremely rapid growth, far beyond the Government’s intention with the extra investment, my particular interest is to have a look beneath the big number of last year, the 177,000 extra.

Q507 Chair: Could I interrupt you at that point, because you are anticipating my next question, and I would like to get it in. You made the point on the Panorama programme that big headline numbers look great on paper, but scratch under the surface and maybe we should not be calling them all apprenticeships. This highlights the issue of quality, which I think you are about to move on to. How would you define an apprenticeship?

Nick Linford: Let us look under the surface. What have we seen? More than 75% of the growth was for those aged 25 and over. In fact, for those aged 35 and over the increase we have seen is 355%. That is more than 84,000 additional apprentices aged 25 and over. When I met the Committee in a private session not so long ago, I used particular case studies: one very large employer in the case of Morrisons, which I know got a fairly good outing on Panorama as well, and has been in front of you with the training provider Elmfield. It is about looking at that and saying what are these apprenticeships that are being funded as apprentices and are being counted as apprentices and, if they are big numbers of adults that are already in work-in one of their most recent documents the SFA has coined the term "converters" for them-if they are existing employees. What is particularly the case with the larger employer is that the duration for the existing employee is fairly short, which makes sense if you consider that the funding is less, and the colleges and training providers still need to be efficient, especially where they are not charging. You may want to come on to that. My view is that a number of these learning and development programmes funded as apprenticeships should not be called apprenticeships and should not be funded by the public purse.

Q508 Chair: What essential element should be included in a definition of an apprenticeship?

Nick Linford: I have written about that in FE Week just this week. My personal view is that an apprenticeship is an experience; that is what it is beyond the mandatory frameworks. There are very clear definitions that are mandated by what we now call Issuing Authorities, or by Sector Skills Councils. There must be functional skills or English and maths at Level 1 if you are doing a Level 2 apprenticeship, and at Level 2 if you are doing Level 3. There must be a knowledge element. There must be a competency element through the qualification regime.

It is very easy to tick boxes to say, "All of the boxes have been ticked. I would like to claim the funding, and I would like to give the learner the certificate." My view is that for an apprenticeship, it should be more about the experience of having a real job. I would like to talk a bit about how perhaps the funding agencies should incentivise, not conversion of existing employees, but apprentices that are entering the workplace. I am very disappointed that among all of the things the Government are now tackling, such as durations, they are not paying much more attention to those under the age of 25, in the context of record youth unemployment, and those where it is about getting into the workplace, not about having preexisting skills accredited.

Q509 Chair: Perhaps I can just tease out a point it is very difficult to work through. You have said that, in effect, it must be a job. Secondly, you have said that it should not be people in pre-existing employment. To a certain extent, there is an overlap on those issues. How can you draw a distinction?

Nick Linford: The important thing to remember is that the apprenticeship is not the only training route when you are in the workplace. For me, that is one of the big problems that the Government have made. They have proliferated a myth that the only routes to public funding in the workplace for training is an apprenticeship, which is not true; there are other workplace qualifications that can be done and publicly funded that are not apprenticeships.

Secondly, coming on to some points you were raising earlier about who should be paying, this Government and the last Government have done very little to tackle situations where training for adults in the workplace should be paid for by the employer. Where we create situations of extreme rapid growth for existing employees, we let large employers off the hook.

Q510 Chair: Regarding the quantity versus quality issue, what do you think the objective of the apprenticeship programme should be?

Nick Linford: I think that apprenticeships are there to offer real work with training. That is the strap line for me. That is something that should be ensured and monitored, and where it is not happening it should not be funded. If you are talking specifically about quality, many people would have different definitions, and there is sometimes a blurring between the lines of compliance. For me, compliance is about saying it is a real job with training, not just assessment of existing skills.

When you move on and talk about quality, it is right to say that a certain duration does not necessarily mean there will be good quality or not. My concern has been that Ofsted have been pretty absent; they have produced a report in the last week looking at some case studies, but they have been pretty absent in the last two years around the monitoring of quality. Until July, people were very unclear who was responsible for the monitoring and measurement of quality in the workplace. Not very many people know that on 18 July, Vince Cable gave the National Apprenticeship Service official responsibility for both quality and value for money. That was given to the Chief Executive of NAS.

They have been identified as the bearer of quality. You quite rightly raised earlier as a Committee that there is a tension between being the marketing department and the quality assurance department. I have yet to see any evidence from NAS themselves that they are well placed to take on that role. The Minister has been pushing incredibly hard, and is introducing certain compliance aspects-quite rightly with minimum durations. That means that it can form part of the contract with the college or training provider and if they did not meet those conditions they would not be funded.

Compliance has been met, but the softer issue is whether quality is being met. We should look back at things like the Adult Learning Inspectorate, who understood quality assurance in the workplace, and learn some lessons there. Maybe Ofsted should focus on classrooms. I know that it is very good at focusing on schools, but maybe we need a professional quality assurance body that is not about compliance, but is about the learning experience, and ensuring that public money is best spent for the benefit of, I would say, ideally young people.

Q511 Chair: Your response was work-focused, but do you not think there is a role for apprenticeships in raising the general level of skills within a work force?

Nick Linford: The point about apprenticeships is that they are funded by the taxpayer, by the public purse, as a framework of qualifications. It should be a substantial learning experience including numeracy, literacy and transferrable skills, and then the knowledge and the other aspects. If an adult needs some numeracy skills, they can be funded by the Government for numeracy training in the workplace. If they need literacy skills, they can be funded for a literacy qualification in the workplace. Under certain circumstances, where they need vocational skills, they can get those as well.

My point around apprenticeships is that they should not be classed as the catch-all only option, because you end up with the situation we have now, where large bodies and individuals representing colleges and training providers are questioning the definition of an apprenticeship. The lay person would be fairly bemused about why, after so much time, we are revisiting that definition.

If I were privileged enough to be able to make some of the decisions, one of them would be to better articulate that employers have a range of publicly funded training opportunities. Apprenticeships are not the only option, and they are not appropriate in all cases. I would go further than that. I would introduce minimum fees, particularly for large employers, and I would probably incentivise college and training providers much more to take unemployed people on to apprenticeship programmes, and perhaps fully fund those aged 19 to 24, rather than, as you heard earlier, only paying half. But where you are converting existing employees, that should be a much lesser priority.

Q512 Simon Kirby: Nick, there is some danger of you being a lone voice in this debate. Perhaps the Labour Party might join you. What do you say when the Minister has recently received a letter from a large number of employers and importantly the TUC, saying they warmly welcome the Government’s focus on apprenticeships, and its guarantee on apprenticeship quality? Is that not totally at odds with what you are saying, and if that is the case, do you not represent a minority view?

Nick Linford: No. Had I been given the option to sign that letter, I would have signed it. I warmly welcome the focus on apprenticeships. I think it is a fantastic programme. I think that it should be encouraged. I warmly encourage the focus on quality. As an expert on funding, having published FE Week for the last six months, and being first to report on the issues, I was quite heartened to hear Tom from Unionlearn say that the issues may be at the margins but if they are not dealt with, they can quickly get out of control. That is very much my view.

My point is that you cannot invest in the programme to the point where you are only interested in the numbers. When NAS saw a target of 50,000 to achieve, from what I understand, they were quite concerned, because it is difficult to create apprenticeship places if what you are trying to do is take on new employees, particularly in a market where the economy is struggling. They took some soft options; it was referred to earlier as low-hanging fruit. They went to large employers like Morrisons, who went from doing no apprenticeships for those aged 25 and over, to, in little more than a year, 40,000-I think Panorama said. Elmfield were advertising one of their roles where they said they were hoping to achieve 100,000-100,000 with one employer.

I warmly welcome all the positive statements. I have openly and warmly welcomed the minimum durations, and the Minister is doing the right thing to set down some compliance rules. What is missing is softer things around how we are actually measuring quality. Who is doing that? Is it the Sector Skills Council? Is it the awarding body? Is it the college training provider? Is it Ofsted? Is it now NAS? And with a limited work force that has been reduced under the cuts, how have NAS suddenly got these quality assurance skills? Where have they come from? I am not convinced. They have published their Quality Action Plan this week. It contains not a single date or deadline. It is the first time I have seen a plan without one of those. I warmly welcome all of those things, but I want to see real action.

Q513 Mr Ward: I am quite happy to join a lone voice in theory. Am I right in saying, Nick, that what you are talking about is really your concerns about the confusion over what this thing is, and the fact that what has been branded as an apprenticeship in old terms may have been in-service training, continuous professional development, updating of statutory awareness or obligations on staff. It is the confusion over what this thing is that is being branded as the success.

Nick Linford: Yes, absolutely. One of the biggest mistakes that the new Government made, in being very critical of an alternative training programme, called Train to Gain, was that they essentially created this impression that it was being scrapped, and that everything should become an apprenticeship. You have probably heard language like "rebadging" Train to Gain, and so on.

It is difficult to get more than anecdotal evidence, but there are some big examples to draw on, and I have done some of that. The reality on the ground is that where we have seen significant falls, for example in the retail sector on Train to Gain-the numbers are there and I can quote them to you, because I have them with me-we have seen significant increases in apprenticeships. Those apprenticeships are being delivered in a fairly short period of time, as Train to Gain is.

I have no qualms about saying that a lot of the growth that we have seen in the last year is actually Train to Gain provision funded as an apprenticeship. My argument is that Train to Gain is still there, although the Government do not like to call it that, and you can still fund discrete qualifications-you might want to call them NVQs-through that scheme. Where it is not fundable the employer should be paying for it. You might want to have a conversation about employer contributions and minimum fees; I know that was something that a Committee Member picked up on earlier.

Yes, it is too broad-it has become much too broad.

Q514 Chair: You touched earlier on NAS and its approach. How would you measure its success? Again, you have partly pre-empted that question.

Nick Linford: The measurement of the success or otherwise of NAS depends on the metric-the performance indicator. If the performance indicator is on sales, or starts, as we technically refer to them, you have to say they have been incredibly successful. To quote some numbers for you: last year, an increase of 63%, we had 457,200 starts. Interestingly the SFA, the body that actually pays for these courses-these experiences, as I call them-is getting quite nervous about the significant growth on 25-plus.

The numbers that we have seen this year show, in my view, that the Government have lost control of the significant growth on 25-plus. The numbers this year show more than 100,000, just in the first half of this year, for 25-plus. That is a 45% increase on the same period last year. You have the SFA saying things like-this is from a document dated 12 March-"We expect to see a greater focus on the recruitment of young people aged 19 to 24, rather than a maintenance of current recruitment levels for those aged over 25…We will monitor the pattern and volume of 25 Apprenticeship delivery in-year and will not award any growth for 25+ Apprenticeship provision". The funding body was saying that in March.

I refer you back to what they said in June last year. In a document in June last year they were describing moneys that were going unspent; they recovered £37 million from underperforming providers and they said that they would not be offering growth. They "have not been able to agree at this time any additional funding for new 25+ Apprenticeship starts". The funding body said in June last year that they were not funding growth. They had to repeat it quite strongly in March of this year, but what we are actually seeing is continued significant growth-over 100,000 of 25-plus starts, up 45% on a record year last year.

In my view it is out of control, and that is disadvantaging 16 to 24-year-olds. I think the funding body knows that, and that is why they are repeating in March of this year that they will be looking closely at the numbers. I respect the Minister, John Hayes, for creating freedoms and flexibilities- the sector asked for them-but when you have public money and record youth unemployment, it should be much better focused. I certainly will be suggesting, and I said this when I visited Number 10 back in June 2011, that we need revisit whether the 25-plus should be the domain of the employer to pay for, certainly for existing employees. That would allow the training providers and colleges on the ground to focus their marketing efforts on the 16 to 24-year-olds.

Q515 Nadhim Zahawi: The National Audit Office highlighted that most apprenticeships in England are at a lower level than those in other countries. This has been reiterated to us though evidence. In your experience, how does the UK’s apprenticeship programme compare with those in other countries? Can we have a bit of an international comparison?

Nick Linford: I would have to defer to somebody with more experience of what happens internationally. I have not done any work of my own to look at international models. I was quite taken by what Martin Doel said about being careful about drawing immediate comparisons. I have seen examples where individuals are put on Level 2 apprenticeships, but really should be moving straight on to Level 3. A colleague on the Committee brought up the accountancy technician; that is a 14-month apprenticeship for three levels-Level 2, Level 3, and Level 4-being delivered by both training providers and colleges, in fact. That will not be possible from 1 August, and they are already having to redefine that.

The minimum requirements for these bright young kids is that they have got five A* star A to C, yet they start a 14-month course at Level 2, which by proxy would assume they would only need a Level 1 in English and maths, which clearly they already have because they have actually got Level 2. Both colleges and training providers should be more mindful of the right starting point, and if we now have minimum durations we should not be disadvantaging young people from progressing fast enough when they are already putting in minimum durations. The starting point is very important. That is a long answer to a simple question, and I should have just said, as I started by saying, that I do not know about international comparisons.

Q516 Nadhim Zahawi: You have already expressed the next part of my question in your concerns around what the NAO has already highlighted, that the expansions have been in the 25-plus age group. Let me put it to you in a different way. Rather than being worried about it, should we not celebrate that that group is getting further training and the ability to become a stronger work force by being much more flexible? Rather than denigrating it and conspiracy theorising about it-that it is money that has been shifted from one place to another-should we not celebrate it, but at the same time focus on the younger age group?

Nick Linford: My personal view is that we should celebrate it; we just should not call it an apprenticeship. Simple. I have never said that an adult of any age, even 110, should not have training, should not potentially be in a position where they are responding to a redundancy scenario and need retraining. I have never said that that should not be Government funded, although clearly in certain circumstances public money needs to be prioritised, and it might not always be appropriate.

Of course it should be celebrated. My concern comes when you have vast numbers of existing employees being given certificates that they have achieved an apprenticeship. You heard earlier, particularly from Tom-

Q517 Nadhim Zahawi: But if they have learned a new skill set, would that not be an apprenticeship?

Nick Linford: My point is that I celebrate the new skill set. What I am saying is that if you are in a school and you are worried about the way that the schools are promoting apprenticeships, if that is a problem, what better way than saying apprenticeships are not all that: "Look, you can do it in 28 weeks as an existing employee and have most of the skills that you already had assessed and certificated." Surely if the Minister is talking about a gold standard of apprenticeship, our young people should be aspiring to get on that programme and receive significant training, significant experience of being in the work force, and we should be protecting that from other types of training, which we should just call other types of training.

Q518 Nadhim Zahawi: Do you agree with Apprenticeship England’s calls for a root and branch re-evaluation for the way apprenticeships are regulated and administered?

Nick Linford: We have the two founders of the group in the room, as it happens. Yes and no, in terms of a re-evaluation. We have the answers-

Q519 Nadhim Zahawi: Is it yes or no?

Nick Linford: I think it is no.

Q520 Nadhim Zahawi: Good, keep going.

Nick Linford: I have told them this. The reason why I think it is no is there is no room for delay. It is unfortunate, but I understand the issue, that the Committee started a while ago and it is going to take a long time-I am sure it will publish before recess-but we know the answers. I am very clear on what should happen as far as the structures are concerned, and the Minster is in a position to take some serious action decisions. Some of those are happening, but I am not convinced, for example, that the National Apprenticeship Service have the armoury to see through the role they have been given around quality. That needs much more attention. It was referred to, not unsurprisingly, by other people who came before me, who said that there is more transparency about their role as the promoter than their role as the quality assurer. I do not think there is a need for review, but there is a significant need for further reform.

Q521 Paul Blomfield: In terms of quality and your earlier comment about Level 2 and Level 3, you modestly said you could not comment on international comparisons, but do you not think we are setting, as a country, our sights a bit low by the acceptance of Level 2, when many competitor countries are looking at Level 3 standards?

Nick Linford: I spent seven years at Lewisham College as their Director of Planning and Performance. My job there, among many others, was to plan the courses that we were going to run. The way you decide on a level is on the basis of learner need. You assess that need. For any college or training provider to design a programme around a level before they have met the individual is ridiculous-you are going to start at Level 2 because that is the course and it starts at Level 2, or you have got to start the AAT at Level 2 because that is where we start.

Clearly the public money, time and experience for the young person or the adult, should be at the level that is appropriate for them. If we have vast numbers of Level 2s that should only be, in my view, because that is what individuals need. You can only know whether or not the very large numbers at Level 2 are lower than they should be by looking at the experience of the people that are coming on them.

I wanted to raise this point and maybe now is the time to do it: there are a certain number of key questions that the Government do not ask at the point of both enrolment and at the exit, with regard to apprenticeship and other programmes. One obvious key question at the point of enrolment is: is this creating a job or not? Why is that not an important thing to ask for an apprenticeship, if you are spending public money?

At the point of leaving, do they get to keep the job? You talked about ATAs earlier; it should surely be a significant performance metric for them that you get to keep the job at the end. I recruited an apprentice through an ATA; she is now a full-time employee of mine, so that is a success story. I would not rubbish all ATAs, but it comes back to compliance and being clear about what you expect for the public money.

More generally, at the point of progression, what is the learner’s experience at that point-listening to the learner-and are they progressing to a level where they are not only doing Level 3, but they now have more responsibility? Of the 40,000 to 50,000 starts at Morrisons, I question what percentage of those are progressing in their career with Morrisons. I cannot imagine it is a huge percentage. Where are they going? They will need those staff at those levels.

The Government could be doing a lot more to gather informative information at the start and at the end to be able to answer that question of level appropriately.

Q522 Mr Ward: When NVQs were first introduced there were a lot of people who achieved NVQs by accrediting what they could already do at a level of competency. But it was a qualification. The apprenticeship seems to be badged as a qualification when it is a route to, and as soon as you get to something you stop becoming an apprentice. It seems as if there is confusion about badging something at completely different levels and different sectors as being a thing, which then cannot be compared because every single one would be different.

Nick Linford: Yes. It is interesting what Martin said about colleges being for the local community and not seeking immediate profit. The risk, without proper oversight of quality, is that you look at the compliance elements and ask what it will require to be able to get the apprentice the certificate, and then the college training provider the income. Then you do as little as possible-that is not how it should be-to meet those requirements; you tick those boxes. Train to Gain suffered from that with the NVQ. NVQs are very much about demonstrating skill as opposed to learning skill; they are an assessment-based model, as opposed to a training technical certificate based model. The risk is that the apprenticeships have become about certification, rather than about the learning and the experience.

I am mindful that in the last three or four months the Minister and NAS have been speaking in unison about quality over quantity. I do not think we should take that at face value; we should be able to see the evidence of that on the ground. Minimum durations are a part of that. I feel strongly that if you want to see real quality you need to have an Ofsted equivalent, and/or Ofsted, which is able to look beyond the boxes that have been ticked in the right place. The learner’s experience is a valuable one and is well served by the public purse.

The NVQ model in a sense has been exploited; it is still being exploited. It will inevitably be less exploited with minimum durations, but there is still further to go on prioritising young people.

Q523 Nadhim Zahawi: The NAO report identified over a dozen key organisations that are involved in the funding flow. Do you think that the structure of the apprenticeship programme is efficient?

Nick Linford: No, it is not.

Q524 Nadhim Zahawi: How would you restructure the funding of those apprenticeships?

Nick Linford: Let us start by appreciating that the National Apprenticeship Service say that they have end-to-end responsibility for apprenticeships, and yet they have no responsibility for the funding and compliance. It is the only body I am aware of that claims to have end-to-end responsibility, but does not control the money, the compliance or use of that funding.

My view very clearly, and there is a lot of evidence of this, is that there has been a blurring of the lines of responsibility between the National Apprenticeship Service and the Skills Funding Agency, which has led to slowness to respond and a definite lack of clarity about who is responsible. Watching the chief executives of both of those agencies at the Public Accounts Committee-if you did not see it do watch it-it is quite interesting to watch the body language; one described himself as the banker, and the other described himself as the marketer. The structures are inappropriate to be separated and to have two chief executives. You have to have one person who is responsible to the Minister. I am aware that the Committee before this Government were critical of having two separate structures. We are partly in the situation of questioning the value of some programmes and whether they have been dealt with, because we have retained the two structures. I would have single responsibility, absolute clarity about who is responsible, but not leave the independent role to monitor quality with the body that deals with compliance and funding. That has to be more independent. How can the funding body be responsible for saying whether they spent the money well or not? That has to be done independently.

Q525 Chair: My recollection was that the previous report expressed concern about potential problems with it, but would await evidence; they are in the process of gathering that evidence.

Nick Linford: Sorry, this was in the previous Committee, before this Government.

Chair: Yes. I think only myself and Brian Binley, who is not here today, are survivors of that particular report.

Q526 Ann McKechin: The Committee has received evidence from Professors Fuller and Unwin suggesting that the funding for apprenticeships is diluted through multiple steps in the funding allocation train, because it is a very complex number of bodies that are engaged with this process. The Government spent £1.2 billion on apprenticeships last year. Is the public getting value for money for its investment under the current delivery model of this very complex structure, or do you think there is an argument for it being substantially streamlined?

Nick Linford: The main inefficiencies in terms of the £1.2 billion do not necessarily come from having two-a NAS and an SFA. They come from a very extended supply chain in terms of delivery. We have not much covered subcontracting; that was a topic of particular focus in the latter half of the Panorama programme. The two big inefficiencies are primarily in subcontracting, and both of these can be an issue with the primary contractors as well, but it is well recognised that subcontracting is a particular focus. One is in the management fees that the prime contractor holds on to as the money flows down the chain. The other is just in poor use of public funds. A lot of poor practice ultimately gets picked up, but often not early enough because it is subcontracted; for example, with regard to very short apprenticeships or even allegations of fraud, or individuals not knowing that they are on a programme. They come from beyond those that the funding agency is responsible directly for; they come through from the subcontractor.

I would like to quote to you from a letter from Geoff Russell, the Chief Executive of the Skills Funding Agency, to John Hayes, on 24 May-about a year ago now; it was a letter about the potential misuse of funds. "Risk is likely to increase in the context of the economy, funding challenges and greater levels of subcontracting". It goes on, "Subcontracting is the area most prone to mismanagement and abuse, and is responsible for about 70% of our current investigations". We have moved forward now beyond Panorama, and even the Association of Employment and Learning Providers are calling for "an urgent review of subcontracting." If you are looking for inefficiencies in the structures, I would look to how easy it is currently for new providers to enter the market under the radar, as it is sometimes referred to, though prime contractors, who currently, where some of the money is going unspent, are perhaps not paying enough attention to due diligence when they are taking on people to help them deliver the numbers.

Q527 Ann McKechin: This is the issue, as you said, about how they are accredited; if they are accredited through the prime contractor rather than themselves, and the actual level of supervision.

Nick Linford: Absolutely.

Q528 Ann McKechin: This is the issue in a number of the examples shown on the Panorama programme; there appeared to be no degree of independent assessment of the quality of the work and the contact between the training provider and the employee. Is this an issue that the Government need to pay more attention to or need to set down further regulations? We have heard there is an increasing number of private providers entering into this sector; in some areas that will be appropriate, but it did seem that the major problem was that there was no degree of independent scrutiny of what they were providing, and quality assessment seemed to be pretty superficial.

Nick Linford: Yes. The Government have introduced a number of policies that have led to significantly more subcontracting. They have introduced minimum levels of contracts, which mean that prime contractors have to become subcontractors. They also removed a rule that said you were not able to subcontract anything more than 51%; you can now essentially just be a managing agent, you do not even have to deliver any provisions as a prime contractor yourself. They have recognised that there are problems, and they are putting in place a number of steps to try and better regulate the system, including publishing some of the information around who is and who is not a subcontractor.

I would, however, point to some other actions that undermine their attempts, which I think they need to revisit. The SFA has a department at called the Provider Financial Assurance Department, and one of its roles is to assure that the finances are being appropriately spent. That team has gone from about 100 to about 60, so they have fewer people looking at more providers in terms of subcontractors. Secondly, they published information in February that showed that under the former Learning and Skills Council they undertook 1,175 workplace funding audits. The SFA in 2010-11 undertook 185-that is 84% fewer audits that took place under that regime. That is by design. In a statement in July 2011 it said, "The Agency will operate a radically simpler and a more market-driven funding and regulatory system…The Agency will be less interventionist and operate a less labour-intensive, more simplified system."

Q529 Ann McKechin: Does it have a risk assessment strategy for how it would decide which institutions it would decide to visit?

Nick Linford: A very good question. I am sure that is a question that you would want to ask them when they come before the Committee.

Q530 Ann McKechin: In your experience, how competitive is the training provider market, or has it simply been allowed to gain, in some cases, pretty excessive profits for no real return in value?

Nick Linford: There are particular case studies that warrant an independent review to learn the lessons from what went wrong, in terms of the use of public funds and the profits, to ensure it does not happen again. There are others, but the best example that requires further investigation has to be why the training provider Elmfield’s first contract with the SFA was £20 million, which was doubled during the year because they were delivering Morrisons provision in half the time that they had planned, even though they were advertising assessors on six month short-term contracts. You know the numbers. One of the things that the Committee did not ask about, but is in the public domain and was published by The Times Educational Supplement, was the £6.5 million spent on properties by the owner of Elmfield out of that money, in addition to the dividend that you are familiar with.

My big question to the Government, and there should be a review to look at this, is why did the contract go to the training provider? At the time there was a National Employer Service that gives contracts to the employers themselves-employer ownership is a big thing at the moment anyway. Had they done that they could have negotiated-which is what they do-a much more efficient, cost-effective rate. You heard the owner of Elmfield here saying, "It is not my fault if I get overpaid". That could have been done; why was it not done?

Secondly, as far as some of those profits are concerned, I feel, as an individual, outraged that the first time they were visited by Ofsted they were already on a £40 million contract that had been doubled, and Ofsted said it was satisfactory. How much of the £3 million after tax in dividend could have been spent on a better service to those employees? I think a lot of it; probably all of it.

Q531 Chair: I had a series of questions covering much of that and you have pre-empted them in some of your answers, but there are still some areas that need to be addressed. Would you say that effectively in its contract the Government is paying £40 million to a training provider to merely sign certificates, given the fact that Morrisons said they would be providing the training anyway?

Nick Linford: There are two issues. It was very telling that when you asked Morrisons, "Would you have done it anyway?" they said yes. That is the definition of deadweight. That is a technical term that Tom mentioned earlier: the Government, the Treasury and we are paying for something that would have happened anyway-displacement, deadweight. That is one issue. Quite clearly, in my view, why should we? Resources are scarce. We have cut Education Maintenance Allowance. That money could have been spent on supporting young people through EMA and other things, rather than paying for something that the employer-Morrisons turned about a £1 billion profit last year, and would have used some of that, according to what they said.

The second issue, which you need to treat separately, is whether it was paying for training or not, or if it was just assessment. Again, Morrisons said that the reason they used a training provider was to get access to the certification. I would say that anyone can gain access to that certification without public subsidy. They could quite easily have paid Elmfield for the training, and Elmfield’s awarding body could equally have paid for the certification. We should certainly not have been paying for national rates of apprenticeships when it seems implausible that a full-time employee in the workplace would have got much more than an assessment of their existing skills in those 28 weeks.

Q532 Chair: What would you expect the training provider to actually do?

Nick Linford: The regulation is very clear in this regard. I do not know how much you have been covering a technical area known as the SASE, or the Specification Apprenticeship Standards for England. It is very clear in there that there are not minimum duration expectations, but minimum hour durations that are both on and off the job, or away from the work pressures. I do not want to bore you too much with that, but there is a rule of 280 hours in total, of which 100, or 30%, whichever is greater, is off the job. I would be very interested to see whether in 28 weeks this statutory requirement was being met.

I am a very big fan of the day-release model, which is still being delivered in some circumstances. Typically, when the National Apprenticeship Service put forward apprentices to hear from, they would be in areas where they would be a day a week at the college, learning skills in workshops, and then four days a week in the workplace. That is not to say you cannot do everything in the workplace, but where employers do not have the facilities, I find it hard to believe they could be doing very much more than assessing skills as opposed to delivering substantial training.

Q533 Chair: You have mentioned the profit levels of Elmfield before, and quite rightly Elmfield said the state was paying too much money because they did not recognise that there were efficiencies in this model. Do you think the Government do recognise this now?

Nick Linford: Yes, if for no other reason because they have stated that where prior attainment exists that should be used to reduce the funding that is achieved. There are rules-I am surprised they were not used, and I would even revisit whether or not they should be retrospectively-known as the Principles of Funding. It is public funding after all. If you have a delivery model that ticks all the boxes, but you are making upwards of 40% profit margin, that is inappropriate with public money. That should have been dealt with.

I find it astonishing on a £40 million contract that there was not an account manager from the Skills Funding Agency all over this. Who signed off? How did that conversation work, which said, "You have delivered twice as many apprentices in six months with Morrisons, upwards of 20,000, nearly all 25-plus and we are only half way through the year". How did that conversation go that led to them doubling the contract to £40 million in the year for that single employer? Who signed that off? Up to what level? I think that will not happen again. The view of most individuals I have spoken to is that Morrisons should pay for their own learning and development.

Q534 Chair: What recommendations would you make to ensure that this does not happen again?

Nick Linford: I have a number. I was talking about who is paying. You have to go back and look at employer contributions. That was brought up earlier. I have a quote here from July 2010, from the Banks Review of fees. The last Government had an independent review of fees, and it was unfortunate that it was published right at the end of their tenure, and I am disappointed that nothing has happened since. I quote: "The current system for ensuring employers co-invest alongside Government in this range of Further Education provision is failing. It is not securing the level of investment expected and required from those who should contribute, and action is essential to change what is widely regarded as unfair and untenable."

At our newspaper, Further Education Week, we hear regularly both from colleges and training providers about how they are being undercut. They are well intended with their employers at charging them for the contribution of the high quality training that costs money. That is the point: high quality training costs money. Where the Government are paying reduced rates on the basis that the employer is contributing it seems implausible that high quality can be delivered without charging the employer. If the Government expect and will get high quality, the only way is for the employer to contribute. The Government play a huge role in changing the culture of employers to put their hand in their pocket and pay for it. Employers will expect a lot more when they pay for it, and you know they will want it and use it well when they are paying for it.

The only way to go is down the route of minimum fees. While it may be imperfect and you may want tariff arrangements, I am getting feedback from colleges and training providers who are conscious of employers putting hands in their pockets. I put a survey out to my 5,000 members yesterday lunch-time and got nearly 200 responses; 60% of those that had a view-yes or no on fees-said you have to do minimum fees. There has to be something in the contract, particularly with large employers, and certainly for those with existing employees, maybe not as a barrier for new ones; the employer should be paying their fair share to get high quality training.

Q535 Chair: You will be publishing the results of this survey?

Nick Linford: It will be in the next edition of FE Week.

Q536 Chair: You get the plug in.

Nick Linford: The second thing I would say is that-I mentioned it earlier in terms of my recommendation-it is bonkers to me that we are not recognising the difference between an apprentice, where we create a job, and an apprentice where we convert, as the SFA call it, an employer. I would be looking carefully at using the 25-plus Apprenticeship funding to fully fund 19 to 24-year-olds that were new to employment.

Q537 Chair: How typical do you think the Morrisons-Elmfield situation is to the industry as a whole?

Nick Linford: It is a very good question, and there has been a lot of debate about whether Panorama represents a big or a small issue. It is important to mention with the Morrisons case that it is not just one case out of 5,000 arrangements or engagements with employers. It is a very important case. It is the largest deliverer of apprenticeships with the fastest-growing provider. They are fastest growing off the back, primarily, of the Morrisons contract.

If you look at the numbers, over 10% of all apprentices are with a single employer. You then look elsewhere in the same sector-Asda, for example. In May, the Government awarded an £8 million contract to an awarding body who have a subsidiary known as City & Guilds for Business to deliver 25,000 apprentices with Asda. You look at some of the very large employers and you can see some very large numbers of apprentices. Therefore, to describe that as marginal within the context of training existing employees, statistically I would claim is not the case. When you look at individual cases, obviously one out of how ever many thousand employer engagements is marginal. There are semantics around whether it is a big issue or not. I would bring us straight back-I will conclude on this point-and agree wholeheartedly with what Tom said earlier: if you do not nip some of these things in the bud early and quickly-FE Week has led the way in highlighting some of these things so that they can be dealt with, and people are aware of them-other colleges, other training providers, look to the left, look to the right, and say, "If that is the way to find efficiencies then we will be out of the game soon enough if we do not follow suit". Even if it were a marginal, you have to deal with it.

Chair: Thank you. That is very helpful, very provocative, and no doubt will be incorporated into our recommendations. As I always say, if you feel that there is anything else that you would like to submit on any of the questions that we asked you, or should have asked you, but did not, then feel free to write to us. Again, we may ask you further questions when on reflection we look at the areas that we have covered. Thank you very much.

Prepared 5th November 2012