APP0037

 

 

Written evidence submitted by the Greater Manchester Learning Provider Network

 

 

The Greater Manchester Learning Provider Network is a membership organisation of over one hundred independent training providers and further education colleges delivering Apprenticeships, Traineeships and adult skills training across Greater Manchester. Members of the network work with over 20,000 Greater Manchester employers on a regular basis.  Collectively our members are managing and delivering the training to well over 80% of all the Apprenticeships and Traineeships within the sub-region.

 

The mission of the GMLPN is to support the continued growth of the Greater Manchester economy by promoting the value to business of investing in skills.

 

The network welcomes the opportunity to contribute to the Inquiry on Apprenticeships and specifically the negative impact which recent 16-18 Apprenticeship funding decisions are having on the achievement of both the Government’s strategy to raise productivity and the 3 million Apprenticeship target.

 

 

Government funding restrictions means UK can’t claim productivity improvement dividend and a reduction to in work benefits payments.

 

Introduction

 

  1. The Government has identified the UK’s skills weaknesses as a key inhibitor to increased productivity and national wealth. In Fixing the Foundations – Creating a more prosperous nation government laid out a series of radical measures in order to address long standing and seemingly intractable problems with the skills system in the UK.

 

  1. In Greater Manchester alone the impact of this skills deficit is conservatively estimated to be £3bn per annum in lost productivity when compared with UK norms.

 

  1. The main government skills initiative to address this £3bn deficit is to increase Apprenticeships which currently cost some £60m per annum in Greater Manchester.  Further limited support is provided for skills training to unemployed people needing industry specific skills.   

 

  1. In GM the expansion of the Apprenticeships and Skills programmes are viewed as a critical investment providing tangible returns enabling the sub-region to:

 

 

 

  1. Greater Manchester has been experiencing strong growth in Apprenticeship, Traineeship and Skills programme starts.  The plan, although small compared to the task, is clearly gaining momentum.  However, it is now at risk.

 

  1. Put simply, to continue this growth will require additional funding.

 

  1. There is no dynamic system to allocate or re-allocate budget for Apprenticeships, Traineeships or Skills programmes.  There are 2 re-allocation points in a year but these are retrospective with no guarantees, and a provider has to over-spend its budget before it can get more allocation.  If that growth request is then rejected the provider would be unable to fund starts or indeed existing learners.

 

  1. In the recent January growth request window most 19+ growth requests were funded but only 40% of 16-18 apprenticeship and no 16-18 traineeship growth was funded. This is having a negative impact on several aspects of Government policy:

 

 

 

 

  1. To determine the impact of this underfunding on the GM Strategy for Apprenticeships the GMLPN has surveyed its members.

 

 

Key findings

 

-          1 in 5 GM providers were seeking growth – 11 out of 54. Only 49% of 16-18 Apprenticeship growth requested was granted – a shortfall of £1.75m;

 

-          No growth requests were granted for 16-18 Traineeship growth;

 

-          In February- March 2016, 303 planned Apprenticeship starts in GM will be lost

 

-          No Apprenticeship growth was allocated for the period from April 2016 onwards so how would the 49% of new 16-18 startrs be funded?

 

 

 

Consequences

 

-          Brake on productivity improvement

 

-          Brake on improving the salaries of employees claiming in work benefit.

 

-          Brake on Apprenticeship and Traineeship starts;

 

-          Providers delivering good quality Apprenticeships were encouraged to grow by the SFA with a high degree of confidence that funds would be made available. Recent decisions undermine this. Providers are not going to invest if we have this stop/start approach to funding.

 

-          The 303 lost 16-18 places equate to 500 annually in Greater Manchester and over 10,000 nationally.

 

-          Traineeships growth which have provided an excellent route for young people to progress to Apprenticeships are now being undermined.  The strategy in this funding stream is particularly confused because the government has just widened the provider base to include delivery by poorly performing providers, to increase numbers. Yet there isn’t enough funds for good providers.

 

-          The close alignment between a young person’s legal entitlement to learning, employer need and the Government’s Apprenticeship growth strategy is now at risk.

 

-          By refusing to fund these Apprenticeships the Government is undermining the Raising the Participation Age policy and strategy.

 

  1. Impact on productivity. Greater Manchester’s workforce achieves less than 87% of the UK’s average productivity costing £6.3bn per annum. Half of that gap is directly attributed to a gap in skills. The gap with London and the South East is widening

 

  1. Whilst the Apprenticeship Levy will eventually increase the overall funding available, in the interim, it is vital that the current momentum and growth in Apprenticeships is not lost. The recent response to 16-18 growth requests puts this at risk. Not only does this send inappropriate signals to young people, employers and Apprenticeship providers it does not make either economic or fiscal sense. The National Audit Office has estimated that for every £1 of public funding invested there is a direct £18 return to Government in the form of increased taxation.

 

  1. The current process to facilitate growth is for Apprenticeship training providers to submit growth requests (in Jan and April each year) to fund additional starts requested by employers for existing employees and young people entering the workplace. In recent years and in line with Government policy all growth in good quality 16-18 Apprenticeships has been funded.

 

  1. The following needs to happen:

-          Government needs to sustain its investment in Apprenticeships as a key contributor to increasing productivity and wealth creation.  If the widening gap between regions is to be halted skills investment must be enhanced.

 

-          The Government need to reassure the sector that good quality 16-18 Apprenticeships and Traineeships remain a key priority and will be funded in full;

 

-          Government needs to be unequivocal that the legal entitlement which young people, aged 16-18  have to free learning will be honoured;

 

-          The SFA to bring forward their next performance management timetable and the Government to ensure that sufficient funding from the overall funding which support 16-18 year olds is directed to achieve the Apprenticeship growth trajectory;

 

-          Government to target Traineeship funding on those providers who progress young people into Apprenticeships. The decision to allow all SFA funded providers to deliver Traineeships should be reconsidered as it runs the risk of diverting funding to poorer quality provision with no certainty of increased Apprenticeship numbers;

 

-          There should be a review of Government’s funding of Apprenticeships to make sure that funding is directed to where it is adding most value.

 

-          The current funding pressures highlight the continuing inefficiencies associated with a system over-reliant on subcontracting, which in too many cases is a device to retain annual funding allocations rather than to meet employer & learner demand.

 

 

 

 

 

March 2016