Apprenticeships - Business, Innovation and Skills Committee Contents

Conclusions and recommendations

Government policy

1.  The Committee welcomes the Government's commitment to raising skills in the workplace through the apprenticeship programme. (Paragraph 25)

2.  Our evidence suggests that the apprenticeship scheme continues to lack clarity and purpose in the longer term. Employers, apprentices and other stakeholders remain confused about the overarching objective of the scheme. We therefore recommend that the Government defines an overarching strategy and clear purpose for the apprenticeship programme. Only then can the public and Parliament effectively monitor progress against the outcomes the scheme is intended to achieve. (Paragraph 26)

3.  The National Apprenticeship Service has accepted that its priority in the past has been increasing the number of apprentices and the number of employers taking on apprentices. However, many of our witnesses have argued that the success of the apprenticeship scheme cannot and should not be measured by numbers alone. We are encouraged that NAS is now putting greater emphasis on quality, but are concerned that three of its five priorities for 2011-12 remain focussed on increasing the number of apprenticeship starts. We recommend an urgent review of the objectives and priorities of NAS with a view to justify a focus on achieving quality outcomes in both the objectives and culture of NAS. There must be appropriate measures of output for each objective. Therefore we further recommend that qualitative information (such as quality perception, apprentice satisfaction, public awareness and employer support) also be collected and published alongside more traditional statistics. We discuss and recommend further on this later in the report. (Paragraph 27)

Defining an apprenticeship

4.  It is generally agreed that a single definition is needed to clarify the apprenticeship brand and enable effective regulation. For that reason, we recommend that the Department formulates a formal definition of an 'apprenticeship'. It is important that employers, apprentices, regulators and the Government have a common understanding of what is meant by an apprenticeship, and what is not. While we understand the need for flexibility (for example in the area of duration and past experience), an 'umbrella' definition should include the following elements:

  • Full-time employment;
  • Accreditation and a measure of educational gain;
  • Independently accredited work based learning;
  • Independently accredited off the job training;
  • Competence based skill development programme;
  • An employer led design;
  • Opportunities for progression; and
  • A minimum duration agreed by industry sectors.

Furthermore, any definition should state clearly that apprenticeships are for developing skills not simply for the validation or consolidation of existing skills. (Paragraph 33)

Delivery and funding

5.  While we welcome recent efforts to improve the administrative processes for apprenticeship training for employers, we are concerned that the funding chain remains unnecessarily complex. The sheer number of organisations involved works against the efficient allocation of funds. We therefore recommend that the Department provides a simpler and more efficient delivery system. (Paragraph 41)

6.  We note the concerns that the funding structure (of 100 per cent public funding for 16-18 year olds and 50 per cent for 19-24 year olds) may bias firms towards employing younger apprentices and unfairly disadvantage older applicants. However, there is a lack of empirical evidence and analysis to substantiate these concerns and it is disturbing that the Minister does not have this evidence to hand. We therefore recommend that the Department provides a detailed assessment of the impact that the funding structure has had on the take up of apprenticeships by age group. That assessment should specifically address the following four issues:

  • The actual cost to businesses of employing apprenticeships of differing ages and experience;
  • Inequality perpetuated by the funding;
  • Barriers to progression through the scheme; and
  • Disproportionate impact on specific sectors. (Paragraph 52)

Perception of apprecticeships

7.  While we welcome the efforts of NAS to strengthen the apprenticeship 'brand', we cannot ignore the evidence that the perception of quality may have been damaged in some sectors, which has in turn undermined those efforts. NAS must not trade off between numbers, quality and brand. We therefore recommend that NAS produces a longer-term strategy outlining how it intends to maintain and improve the apprenticeship brand in tandem with its other objectives. (Paragraph 60)

Engaging apprentices­Preparing for apprenticeships

8.  During our inquiry we saw a number of excellent apprenticeships schemes run by business. However, despite the fact that many apprenticeships lead on to degree courses, they are not always promoted in schools as an equally viable route to a career as 'A' levels and university. Furthermore, these routes are often intertwined with students moving between the two. This may be because schools are measured, primarily, by 'A' level attainment and the number of university places gained by each academic year which forces teachers to concentrate on the academic route. This needs to be changed. We therefore recommend that alongside the number of university places gained in an academic year, schools should also be required to publish the number of apprenticeship starts. (Paragraph 68)

9.  We acknowledge that the inclusion of apprenticeships in careers advice is legislated for in the Education Act 2011, but we have found that awareness and resources in schools and colleges remains lacking. We recommend that the Department for Education does more to assist schools in the promotion of vocational training in the curriculum (for example by providing literature, training to teachers and information for careers advisors). It should also ensure that any changes to the secondary curriculum will put proper emphasis and value on pupils taking a vocational route in their careers. The time and resources that institutions dedicate to 'UCAS applications' compared to preparing students for vocational training illustrates the scale of the problem. Success will be measured when schools and colleges place vocational and academic progression on an equal standing in terms of the both the level and quality of resources. (Paragraph 69)

10.  Given the widely held view that NAS should have more involvement with learners through schools, we were disappointed by the Chief Executive's apparent lack of enthusiasm, citing the Education Act 2011 and telling us that NAS was not statutorily responsible. The National Apprenticeship Service should be a familiar name, known to all students and teachers as an authoritative source of information about apprenticeships. We recommend that NAS is given statutory responsibility for raising awareness of apprenticeships for students within schools. This should include some quantifiable measure of success with which to gauge the student awareness of apprenticeships. (Paragraph 74)

Equality, diversity and accessibility

11.  While we were encouraged to hear that the National Apprenticeship Service does take diversity into account, the statistics show that it remains a significant problem. We welcome the work conducted by NAS into diversity, and recommend that it is given specific responsibility and accountability to raise awareness of apprenticeships among under-represented groups. This should include a responsibility to promote the advantages of diversity directly to employers. We believe that the apprenticeship programme should be an inspiration and beacon of best practice to the wider economy, demonstrating the advantages of greater diversity at all levels of industry. (Paragraph 80)

Engagement with large businesses

12.  We were encouraged to hear about the high level of support that the National Apprenticeship Service offers large businesses and the apparent success it has had in this area. We recommend that NAS continues to support large employers to engage with the apprenticeship programme, and in particular to use their positions to support local schemes and encourage connected smaller businesses (for example those in their supply chains) to become involved in the programme. We also recommend that the Government actively highlights and celebrates examples of good quality apprenticeships taking place in large businesses to extol the benefits to other employers. (Paragraph 86)

Engagement with small and medium sized businesses

13.  While 80% of apprentices are employed in the SME sector, the major growth in apprentices is in the retail sector. The SME sector in the UK represents a huge untapped potential market for apprenticeships but unlocking it requires far greater focus and resources. Whilst there are already strong links between training providers and SMEs it does not go far enough, and does not engage SMEs which are harder to reach. We therefore recommend that NAS engages local bodies such as LEPs and local Chambers of Commerce to target those companies. Equally, the Department must recognise that NAS will require some additional funding for this to be successful. We will monitor this area of activity closely and will expect NAS to publish quarterly reports on the number of new SMEs it has brought into the apprenticeship programme. (Paragraph 93)

Reducing bureaucracy

14.  We note the recent announcements by the Department of measures to reduce bureaucracy, particularly for large businesses. However, we have heard that this has not been matched with action. Businesses still consider bureaucracy and the perception of 'red-tape' to be a major barrier to employing an apprentice. We recommend that more work is done. Specifically, we recommend that the attitudes and perception of employers, in terms of bureaucracy, are closely monitored by the Department. NAS must engage with businesses of all sizes specifically to hear how they could more easily engage with the scheme. It should report its findings as a matter of urgency. (Paragraph 99)

Alternative models to support SMEs

15.  We have heard that a significant number of small and medium sized employers have struggled to engage with the apprenticeship programme. We are encouraged to hear about innovative delivery models designed to rectify this. We recommend that both Group Training Associations and Apprenticeship Training Agencies continue to be supported by NAS. However, care must be taken to ensure that the quality of learning experience is not jeopardised. We support NAS's recent initiative to set up a Recognition process and National Register for ATAs and recommend that NAS is given formal responsibility for promoting ATAs. It is important that all alternative delivery models are actively monitored and NAS should assess the success of such models not only by the level of employer engagement but also by the quality of the apprentices' actual learning and the subsequent conversion rate from such apprenticeships to full-time employment. (Paragraph 115)

16.  We are encouraged to hear that private industry is introducing new models of training. Specifically, we have heard about the practice of large employers utilising and supporting their supply-chain to supplement their apprenticeship programmes. NAS has told us of its support and contact with large businesses and we recommend that, in its dealings with such businesses, it promotes the benefits of this model by encouraging large employers to support SMEs in their supply chain using apprenticeships. (Paragraph 118)

Government initiatives

17.  We support recent efforts by the Government to increase employer engagement through the 'Employer Ownership Pilot' and the 'SME Incentive Bonus'. These initiatives are in their infancy and we do not wish to tinker with the content of either policy at this stage. However, over time they will need to prove higher levels of employer engagement and value-for-money. We recommend that clear criteria for success are published so that they may be objectively scrutinised and that full value-for-money reviews are conducted into both of these schemes after 18 months. (Paragraph 129)

18.  We recommend that the Government encourages the employment of apprentices in its procurement contracts. While we concede that some flexibility is required (for example around the sector and nature of the work contracted), we recommend that Central Government, Local Government and other publicly funded bodies should seek to achieve at least one additional apprenticeship for every £1m awarded through public procurement as a benchmark. We have been told by the TUC that this is current policy in some construction procurement arrangements. Furthermore, we recommend that the current recruitment practices of prospective contractors (in terms of apprentices) is a factor which is taken in to positive consideration when the Government is considering bids for any public contract. (Paragraph 133)

19.  In terms of using public procurement to incentivise apprenticeships, the Minister told us that he was determined to push this as far as possible "within the constraints of the law". We recommend that in its response the Department sets out how it proposes to resolve any legal issues preventing the Government from attaching requirements for apprentices in major public procurement projects commissioned by itself, local government and publicly-funded bodies. (Paragraph 134)


20.  The burden on employers must always be a consideration when imposing such regulation on the industry. Overall, however, we agree with the bulk of evidence, that the balance between industrial burden and apprenticeship quality in relation to employment criteria has been found successfully by the Government. (Paragraph 140)

21.  We support the introduction of statutory standards (SASE) and the improvement to quality that they appear to have brought to apprenticeships. However, 18 months after their introduction, it would be appropriate to properly examine their impact. We therefore recommend that NAS reviews the impact of the implementation of the standards on training quality, regulatory burden and framework availability. We further recommend that it consults across sectors to assess the regulatory burden and suitability of the regime across the economy. (Paragraph 144)

22.  It is important that employees have functional skill levels of literacy and numeracy to match those of our international competitors. However, this should not disadvantage the ability of specific groups to access training and accreditation. To that end, we endorse the principle that transferrable and core skills should be part of apprenticeship framework. However, we recommend that the 'functional skills' regime be reviewed by the Department twelve months after their introduction. The Department should consult with industry to review the recruitment of apprentices and we recommend that it reports on whether the introduction of 'functional skills' has unfairly discriminated against any group of apprentices (for example those in a specific sector) from completing a framework. If it is proved to be so, we recommend that the Department works with industry to develop alternative models of providing such training. The development of functional skills should be a feature of, not a bar to, apprenticeships. (Paragraph 149)

23.  We have been cautioned that the learner experience is complex and hard to quantify. The Government has promised to improve access to objective and comparable information relating to training providers. We recommend the Department sets out its timetable for delivering this information. (Paragraph 153)

24.  While a minimum duration is not a substitution for a quality framework, we support the Department's recent announcements of a minimum 12 month duration for all apprenticeships frameworks. However, we are concerned that this policy may have unintended consequences. We therefore recommend that the Government closely monitors this requirement and the impact on take-up of more talented apprentices (who may feel held back by the policy) and older learners (who may be dissuaded from training). (Paragraph 162)

25.  The UK's workforce should be given the opportunity to become as highly skilled as possible and we support the Government's drive to increase the number of Higher and Advanced apprenticeships. However, the apprenticeship scheme must reflect the demands of sectors in terms of job roles and skills demanded. We recommend that the National Apprenticeship Service works actively to encourage progression with employers. We also recommend that the Government works with Sector Skill Councils to ensure that, while they remain rigorous, Higher and Advanced level apprenticeships are accessible to all those who have the potential to complete them. Frameworks should be sufficiently flexible not to disqualify such apprentices from progressing. Specifically, the Department should review the appropriateness of framework requirements such as, for example, to have had management experience. (Paragraph 169)

Value for money

26.  The issue of additionality and deadweight loss is key to calculating the value-for-money of any publicly funded project. It is especially pertinent to the funding and provision of apprenticeships. While we were encouraged by the Department's recent Research Paper and the Minister's words on this subject, there is a need for more detailed analysis to be done to better quantify the issue. The Department's own research bemoaned the lack of quality data and it is clear that a significant amount of money is being spent on areas where additionality has not been proved. We therefore recommend that the Government, as a matter of urgency, forms a clear strategy to rectify this through the collection and analysis of the necessary data. (Paragraph 181)

27.  While we were encouraged by the progress made since the NAO's recommendation to improve the targeting of public funding, it is clear that more work needs to be done. Transparency is key in the allocation of investment, particularly if some are to be given preference over others. It is especially important that fixed criteria for preferential funding are published and adhered to so that businesses and individuals have no doubt that the funding is fair, evidence based and attainable. The Minister and Department have been unambiguous that funding should be focussed on 16-24 year old apprentices and advanced (and above) frameworks. We welcome this clarity and, despite the recent Industrial Strategy, recommend that the Department now identifies which 'growth sectors' will benefit from focussed funding at a much more specific level. We further recommend that these sectors are reviewed annually to ensure that public funding is consistently being allocated to those areas where economic benefits are greatest. (Paragraph 193)

28.  We have heard that, despite fairly high levels of media scrutiny on the topic, some training providers continue to offer their services to employers without seeking employer contribution of any kind. This practice suggests either that the quality of training is being compromised in order to reduce costs or that too much public money is being spent on training that the employer should be funding. This practice poses a substantial risk both to the quality of training and the apprenticeship brand with apprentices and employers being the ultimate victims. We recommend that the National Apprenticeship Service, as a priority, produces a robust methodology for valuing employers' in-kind contributions in the future. (Paragraph 200)

29.  We further recommend both that employers be required to publish an annual statement of their contribution to the training provider, and that training providers be obliged to report a statement of contributions and costs to the SFA. This statement must include an account of the value of any in-kind contribution using the methodology proposed above. In addition, we recommend that an annual audit is conducted of a representative sample of employers and training providers to assess the scale of the problem. (Paragraph 201)

30.  We are deeply concerned that both the Minister and the Skills funding Agency have adopted a hands-off approach in respect of the profit levels and value for money of training providers. We were particularly troubled that the Minister appeared unconcerned about value for money given the 36 per cent level of pre-tax profits achieved by Elmfield Training and the statement by the Chief Executive of Elmfield Training that the Government paid out too much money. We are encouraged that the Government is now more aware of these issues and has reviewed the rates to take account of efficiencies and economies of scale that allowed training providers to make substantial savings, and therefore excessive profits, from receiving a flat rate of public funding. We recommend that the Government takes a more active approach in the future and constantly reviews the profit levels of training providers as an indicator of potential risks to efficiency. (Paragraph 209)

31.  We are surprised that the Government, through the Skills Funding Agency, paid £40m for what was essentially an untested product. The quality of training providers is assessed by Ofsted and we recommend that such assessments be a pre-requisite for every provider who is bidding for more than £6 million of Skills Funding Agency money (which would have covered the top thirty contracts last year). Training providers must be incentivised to aspire to provide the best quality training. To that end, we recommend that quality training providers (i.e. those who receive grade 1 or 2 from Ofsted) must be first in line when it comes to allocation (and subsequent reallocation) of public money. (Paragraph 213)

32.  While the practice appears to be widespread, we do not believe that it is desirable for training providers and awarding bodies to be owned by the same group or individuals. The Government should look critically upon this serious issue. To that end, we are encouraged that the regulator Ofqual is conducting a wide market review, which the Skills Funding Agency expects to include an assessment of the issues surrounding combined ownership of training providers and awarding bodies. We look to the National Apprenticeship Service and the Skills Funding Agency to work with Ofqual to ensure that this review is successful and comprehensively deals with this specific issue. We accept that the practice of joint ownership is not unusual but learner experience is key and should not be put in jeopardy by conflicts of interest. Robust mechanisms must be put in place to prevent any conflict of interest impacting the learning experience of the workforce. We recommend that, if the Ofqual review does not cover this, the SFA conducts a more focussed review on the impact of competing incentives, the risk to quality and brand perception arising from this practice. (Paragraph 218)

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Prepared 6 November 2012