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Business, Innovation and Skills CommitteeWritten evidence submitted by CFA

1. Introduction

1.1 The CFA is a government-recognised apprenticeship-issuing authority responsible for pan-sector business skills. This includes skills in the following sectors:

Business and Administration;

Customer Service and Contact Centre;

Enterprise and Business Support;

Governance;

Human Resources and Recruitment;

Industrial Relations;

Languages and Intercultural working;

Management and Leadership; and

Marketing and Sales.

The CFA was formerly known as the Council for Administration.

1.2 The CFA has a remit to define the role of individuals whose job involves business skills and identify the key skills that are essential for success in today’s business environment. We do this through designing and promoting national occupational standards, qualifications and apprenticeships that deliver relevant business skills to those who need them.

1.3 We oversee the development and issue of pan-sector apprenticeship frameworks, which set standards and statutory requirements for apprenticeship design and delivery. A summary of CFA frameworks can be found in Appendix A.

1.4 The CFA has one of the largest organisational footprints of any standards-setting body or Sector Skills Council, representing approximately 11 million UK employees working in pan sector occupations and developing apprenticeship frameworks expected to be started by over 122,000 learners in 2010–11.1

1.5 The CFA is the leading apprenticeship-issuing authority in the UK. CFA pan sector apprenticeships account for 28% of all apprenticeship starts and 27% of all apprenticeship achievements.2 A full breakdown of apprenticeship starts, achievements and success rates can be found in Appendix B.

1.6 The average apprenticeship success rate for all frameworks in 2009–10 was 73.8%. The two largest pan-sector frameworks based on take-up data are the Customer Service and Business and Administration Apprenticeships. These frameworks both have above average success rates of 77.4% and 81.8% respectively.3

1.7 The CFA is one of the most important enablers of the Government’s objective to increase apprenticeship numbers. Our response to this inquiry sets out a series of recommendations that we believe should be implemented to ensure the future success of the apprenticeship programme.

2. National Apprenticeship Service (NAS)

2.1 NAS has an important function promoting apprenticeships, coordinating funding streams and providing a variety of services such as the online apprenticeship vacancy system. However, there is a significant lack of evidence to demonstrate the success of NAS, particularly with regard to its role in engaging with employers.

2.2 The primary reason for the difficulty in assessing the success of NAS and its impact on apprenticeship trends is the lack of an appropriate performance management regime, which should include a benchmarking and evaluation process. The Committee may wish to recommend that BIS should consider adopting such a system so that NAS can be better monitored and that future performance reviews can be considered in an evidence-based way.

2.3 One of the ways NAS may be able to work better is by improving the way it works in partnership with organisations such as the CFA, who play a major role in delivering high success rates in apprenticeship take-up and achievement. NAS too often maintains a “top-down” organisational culture, whereas a greater emphasis on joint-working and “bottom-up” integration would be beneficial when making strategic and operational decisions.

2.4 NAS are in a position to take a leading role in the national marketing of Apprenticeships and provide information, advice and guidance to a variety of stakeholders, including careers advisors and schools.

2.5 NAS need to prioritise their limited resources towards activities which cannot be effectively undertaken by other bodies, such as coordinated national marketing campaigns. NAS should limit their involvement in activities which are better performed by others, such as the highly technical development of apprenticeships, which is best done by Sector Skills Councils and standard setting organisations such as the CFA, who have the detailed expertise and links with employers to be able to produce employer-led frameworks of value.

3. Funding and Value-for-Money

3.1 The additional apprenticeship funding announced by the Coalition Government is essential if the Government is to meet its target of increasing the number of apprenticeships by 250,000 by the end of the current Parliament. Initial data suggests that the Government is performing well against this objective, however any reduction in funding could jeopardise this upward trend.

3.2 Business skills apprenticeships represent a very cost-effective way of enabling young people to enter the workforce. Evidence from the Warwick Institute for Employment Research suggests that apprenticeships undertaken across the business skills pan-sector represent extremely good value for money and offer a rapid and high return on investment. Additional evidence of value-for-money is provided in the recent NAO report on Adult Apprenticeships.

3.3 Due to the dominance of on-the-job training for Business and Administration apprenticeships, it has been estimated that they make a significant productive contribution to a business in the region of 80–90% of a fully experienced worker.4

3.4 Apprenticeships in Business and Administration have, on average, a short payback period of less than two years of post-apprenticeship employment.5 Furthermore, 91% of respondents to a CFA survey stated that employing a business and administration apprentice had a positive or greater impact on their organisation. 52% of respondents to the same survey indicated that employing a business and administration apprentice increased company profits.6

3.5 Whilst the funding available to deliver apprenticeships must reflect the costs of doing so, the value for money of apprenticeships, including business skills apprenticeships, suggests apprenticeship funding is an efficient Government investment. Any moves towards reducing apprenticeship funding must be weighed against the evidenced value for money of apprenticeships and the ongoing drive for high quality delivery of apprenticeships.

3.6 Funding for the provision of apprenticeships must also be matched by appropriate funding for the development of apprenticeship frameworks to ensure the final products are of high quality. It is important that future funding of apprenticeship framework development takes into consideration the in-depth framework and standards development work that is required in order to establish an effective apprenticeship programme which meets statutory requirements. The current funding system does not adequately take these factors into consideration and requires modernisation and reform.

3.7 The current process for funding pan-sector standards and apprenticeship frameworks needs to be reformed because it prejudices against organisations such as the CFA who are best placed to satisfy the Government’s skills policy objectives. The UK Commission for Employment and Skills (UKCES) is responsible for identifying preferred providers to deliver National Occupation Standards, apprenticeship frameworks and qualification-related products. It does so through the Universal Services commissioning process, which is only open to Sector Skills Councils (SSCs). Although the UKCES works with the CFA to support contractual arrangements for setting standards across the pan-sectors, the CFA is not entitled to tender directly for funding through the Universal Services tender or the Employer Investment Fund.

3.8 The current tendering arrangements were predicated on the basis that the SSCs are the primary vehicle for engagement with employers on skills development. However, the tendering process has never properly recognised the unique role and position of organisations such as the CFA, who do not work in specific sectorial areas but across a range of employment sectors to deliver pan-sector business skills. The future tendering process must be reformed to better reflect the nature of pan-sector skills development so that the CFA can tender for funding in a fairer and more equitable way. The Committee should consider recommending that BIS require UKCES to alter the scope of the Universal Services tender to enable this change.

4. Apprenticeship Quality

4.1 There has been a growing debate within employer organisations over a number of years regarding a perceived decrease in the quality of skills and competencies exhibited by trainee workers who join as apprentices or new starters in junior roles. Business organisations and employers have often relied on what could be described as a societal pact with the Government, which provides employers with school-leavers endowed with the basic skills necessary to perform effectively in employment. Despite the increase in academic educational attainment over successive years, this perceived decrease in basic skills continues to be a major source of frustration amongst employer groups.

4.2 It should be remembered however, that in many occupations Level 2 apprenticeships are suitable, reflecting the level of skills needed to undertake specific job roles. The focus on Level 3 apprenticeships and Higher Apprenticeships is understandable, with every opportunity for progression to higher-level skills being applauded. However, this focus should not be to the detriment of suitable, fit-for-purpose Level 2 apprenticeship programmes which offer a valuable, effective foundation of learning (and potential progression) to a high number of users.

4.3 The CFA has attempted to design apprenticeship pathways that provide an integrated pathway of learning from Levels 2–5 in a variety of areas (see Appendix A). This provides an important access route for individuals who may wish to grow and develop their learning over time, perhaps starting from a more basic level and advancing to a higher apprenticeship at a later date. This approach offers significant benefits to employers who ideally wish to grow and retain staff for the benefit of their organisation. Therefore the CFA believes that a key issue for the Committee to consider is not whether there should be more or less Level 3 apprenticeships, but the degree to which apprenticeship pathways are managed so that learners are able to advance to higher apprenticeships within their field of learning, and that employers are also able to share in the resulting benefits.

4.4 It is important that apprenticeship development takes into consideration apprentice as well as employer needs. In recent years there has perhaps been too much focus on developing apprenticeships that meet the needs of employers whilst sacrificing quality for the learner. These two inputs should not be mutually exclusive, but mutually beneficial. The Committee should be mindful of the balance that needs to be struck between these two issues.

4.5 Recently the quality of delivery of apprenticeships has come under scrutiny, with very short delivery times for some apprenticeships being highlighted in the media. CFA supports this scrutiny, noting the potential negative impact that “12-week apprenticeships” can have on the apprenticeship brand, and that in reality, there are no bad apprenticeship frameworks, only bad delivery in a very small number of cases.

4.6 We recommend to the Committee that there is a role for organisations such as the CFA in supporting the high quality delivery of apprenticeships. Currently, framework developers and issuers work closely with employers to develop high quality apprenticeship frameworks, but their responsibilities end once the framework is issued. The close links between organisations such as the CFA and training providers and employers should be utilised to support delivery as well as development.

4.7 In noting the requirement for minimum 12-month delivery for 16–18 year old Apprentices, the CFA are concerned that this will adversely impact on exceptional learners who can achieve some Apprenticeships in less than 12 months, and on some high quality delivery methods, which provide relatively intensive levels of training over a 9–12 month period. Applying 12-month delivery rules rigorously is a sledgehammer approach to a problem which can only be solved by a more genuine assessment of delivery quality. Where provision is judged to be below acceptable quality standards action should be rightly taken, but where an appropriate rationale for short delivery is available, such rationale should be readily accepted.

4.8 Finally, the CFA believes there is a role for NAS and organisations such as the CFA to play in educating and informing employers about delivery expectations; empowering employers to demand high quality delivery for themselves and their learners.

5. Apprenticeship Bonuses

5.1 Apprenticeship bonuses have only recently been introduced, therefore the CFA suggest it is too early to comment on the impact or effectiveness of the bonuses.

5.2 Whilst we know larger employers are more likely to offer apprenticeships, our experience shows that apprenticeships make up a higher proportion of the workforce in small companies than large ones. Evidence from the National Employer Skills Survey for England would appear to support this assertion with apprentices making up 8.6 per 1,000 staff in companies with 5–24 staff compared to 4.0 per 1,000 staff in companies with 200 or more staff. Furthermore, companies with fewer than 25 people account for just under half of all apprenticeships, while companies with fewer than 200 people account for 78% of all apprenticeships.7 This partially calls into question the need to provide bonuses to SMEs for taking on apprentices.

5.3 Any review of the bonus schemes needs to take into account the impact such schemes have on the implicit contractual links between employers and apprentices, whereby the employer implicitly agrees to develop the skills and competences of an apprentices in return for their hard work. Payments associated with taking on apprentices risk removing this implicit contract, replacing it with an explicit payment for a service. Whether the creation of the bonus system also risks creating a dependency culture attached to taking on apprentices should also be investigated as part of a review of the bonus scheme.

5.4 The CFA recommends that in due course the Committee consider the evidence available on the impact of the bonus scheme, and how these outcomes—together with the research evidence outlined above—are contributing to the Government’s intended policy objectives, but that such a review only takes place once the bonus schemes have been in place long enough for the review to make a meaningful assessment of their impact.

6. Funding Arrangements for 16–18 and 19–24 year olds

6.1 The CFA believes that maintaining 100% funding for 16–18 year olds is vital and must not be changed.

6.2 It is highly likely that increasing funding for 19–24 year olds beyond the current 50% would have a significantly positive impact on the uptake of these apprenticeships. The Committee may wish to consider the cost-effectiveness of increasing the proportion of funding for this group of learners particularly within the context of increasing youth unemployment.

6.3 Furthermore, the CFA believes that apprenticeship funding does not currently recognise the significant financial input of many employers with regards to their pan sector apprentices. If any discussion regarding the alteration of apprenticeship funding of 16–18 or 19–24 year olds is to take place then this subsidisation of apprenticeships by employers must first be recognised.

APPENDIX A

Summary of CFA Frameworks

“Pan-sector” or “CFA” apprenticeships include the following frameworks:

Business & Administration;

Contact Centre Operations;

Customer Service;

Marketing;

Sales & Telesales; and

Team Leading and Management.

CFA has also issued the following frameworks in its role as Issuing Authority:

Level 3 Campaigning;

Level 3 Enterprise;

Level 3 Fundraising; and

Level 3 Volunteer Management.

CFA is currently developing the following Higher Apprenticeship frameworks:

Human Resources (in development); and

Project Management (in development).

CFA is supporting the following Higher Apprenticeship frameworks in development:

Innovation and Growth (Business Development)—Lead by the Peter Jones Foundation with CFA in support; and

Public Relations—lead by Pearson in Practice with CFA in support.

Summary of CFA Apprenticeship Levels and Pathways

Business & Administration

Level 2 Business & Administration—generic pathway;

Level 2 Business & Administration—Legal Administration pathway;

Level 2 Business & Administration—Medical Administration pathway;

Level 3 Business & Administration—generic pathway;

Level 3 Business & Administration—Legal Administration pathway;

Level 3 Business & Administration—Medical Administration pathway; and

Level 4 Business & Professional Administration (Higher Apprenticeship).

Customer Service

Level 2 Customer Service; and

Level 3 Customer Service.

Team Leading and Management

Level 2 Team Leading;

Level 3 Management & Leadership; and

Level 5 Leadership & Management (Higher Apprenticeship).

Contact Centre Operations

Level 2 Contact Centre Operations;

Level 3 Contact Centre Operations; and

Level 4 Contact Centre Operations Management higher apprenticeship (England only).

Sales & Telesales

Level 2 Sales & Telesales; and

Level 3 Sales & Telesales.

Marketing

Level 2 Marketing; and

Level 3 Marketing.

APPENDIX B

SHADED AREAS DENOTE CFA APPRENTICESHIPS

TOP TEN APPRENTICESHIP PROGRAMME STARTS BY SECTOR FRAMEWORK (2002–03 TO 2010–11)

Sector Framework

2002–03

2003–04

2004–05

2005–06

2006–07

2007–08

2008–09

2009–10

2010–11

2010–11

 

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year
(provisional)

Starts as
% of total
(2010–11)

Customer Service

14,290

15,210

14,320

15,740

15,250

20,970

22,550

29,410

53,110

12

Health and Social Care

9,680

10,640

9,180

8,150

7,390

12,500

12,270

17,880

50,970

12%

Retail

13,200

12,170

8,950

7,340

8,140

11,840

10,940

16,910

41,390

9%

Business Administration

17,470

18,140

16,210

15,090

15,520

18,100

20,800

27,020

37,980

9%

Hospitality and Catering

20,590

23,760

17,070

15,300

13,230

14,890

16,790

21,470

29,060

7%

Management

1,040

880

1,570

1,850

1,970

6,060

9,930

9,800

28,300

6%

Children’s Care Learning and Development

8,640

11,810

13,180

12,330

13,210

15,260

17,250

20,110

26,770

6%

Engineering

11,100

13,250

10,840

11,480

11,600

13,930

15,250

15,000

17,910

4%

Active Leisure and Learning

4,180

5,020

4,490

4,280

3,790

4,320

7,740

11,340

17,290

4%

Hairdressing

13,260

16,070

16,490

14,880

16,980

16,520

16,150

16,240

16,100

4%

TOP TEN APPRENTICESHIP FRAMEWORK ACHIEVEMENTS BY SECTOR FRAMEWORK (2002–03 TO 2010–11)

Sector Framework

2002–03

2003–04

2004–05

2005–06

2006–07

2007–08

2008–09

2009–10

2010–11

2010–11

 

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year
(provisional)

Achievements
as % of total
(2010–11)

Customer Service

3,420

4,340

5,810

8,440

9,350

8,980

13,500

17,300

20,830

11%

Business Administration

6,250

6,610

7,960

10,390

11,340

10,520

13,190

16,400

18,920

10%

Hospitality and Catering

3,690

4,880

6,720

7,440

7,110

7,450

9,030

10,130

13,030

7%

Children’s Care Learning and Development

1,740

1,810

3,150

6,230

7,160

7,610

9,610

12,130

12,300

7%

Retail

2,850

2,940

3,300

3,930

3,830

4,310

5,870

7,930

11,410

6%

Engineering

4,010

3,930

5,670

8,090

7,190

7,770

8,490

10,100

9,750

5%

Health and Social Care

1,590

1,550

1,910

3,480

4,140

4,150

6,720

8,540

9,730

5%

Hairdressing

3,660

4,420

5,850

8,250

9,800

9,670

10,180

10,770

9,250

5%

Construction

1,820

2,820

5,680

9,380

12,400

12,850

14,250

11,790

7,700

4%

Management

140

140

200

660

1,030

1,080

3,300

5,800

7,370

4%

APPRENTICESHIP PROGRAMME STARTS BY SECTOR FRAMEWORK (2002–03 TO 2010–11)

Sector Framework

2002–03

2003–04

2004–05

2005–06

2006–07

2007–08

2008–09

2009–10

2010–11

 

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year

Full Year
(provisional)

Business Administration

17,470

18,140

16,210

15,090

15,520

18,100

20,800

27,020

37,980

Contact Centre Operations Management

90

Contact Centres

900

1,050

1,320

1,150

750

1,450

1,430

1,490

1,070

Customer Service

14,290

15,210

14,320

15,740

15,250

20,970

22,550

29,410

53,110

Management

1,040

880

1,570

1,850

1,970

6,060

9,930

9,800

28,300

Marketing and Communications

30

50

Sales and Telesales

90

80

140

160

1,490

2,690

2,240

2,010

All apprenticeships total

167,700

193,600

189,000

175,000

184,400

224,800

239,900

279,700

442,700

CFA total

33,700

35,370

33,500

33,970

33,650

48,070

57,400

69,990

122,610

CFA share of total

20%

18%

18%

19%

18%

21%

24%

25%

28%

All apprenticeships: year on year growth

15%

–2%

–7%

5%

22%

7%

17%

*

CFA apprenticeships: year on year growth

5%

–5%

1%

–1%

43%

19%

22%

*

*Note: as 2010–11 data is provisional, we have avoided comparisons with earlier years.

Source: The Data Service, Statistical First Release, October 2011, http://www.thedataservice.org.uk/statistics/statisticalfirstrelease/sfr_current/.

3 February 2012

1 The Data Service, http://www.thedataservice.org.uk/statistics/statisticalfirstrelease/sfr_current/

2 Ibid.

3 Ibid.

4 Warwick Institute for Employment Research, The Net Benefit to Employer Investment in Apprenticeship Training.

5 Ibid.

6 CFA, Business and Administration Apprenticeship Programme Impact Analysis, 2010.

7 UCKES, National Employer Skills Survey for England 2009: Main Report.

Prepared 5th November 2012