QUA0035

 

Written evidence submitted by KPMG UK

 

Introduction

 

  1. The absence of a strong technical route to employment has resulted in reduced productivity and a failure to develop the high level skills our economy requires. It has also contributed to poor social mobility across the UK.

 

  1. At KPMG, we recognise the importance of high-quality apprenticeships to broadening the firm’s recruitment base, but also to affording individuals the opportunity to access a range of different pathways, helping to increase the diversity of our workforce and driving increased social mobility.

 

KPMG Experience

 

  1. KPMG is a leading provider of audit and advisory services to the education sector.  We provide services to over 200 institutions. We operate extensively in the Higher Education, Further Education, school and other not for profit sectors, and bring this to bear, alongside our extensive corporate experience, in our work and reports.

 

  1. In August 2016, in collaboration with the Open University, we were the first of the ‘Big Four’ accountancy firms to launch an apprenticeship service enabling employers to identify and fulfil future training needs. The scheme has been designed to help organisations identify skills gaps and provide and manage their training programmes following the introduction of the Apprenticeship Levy.

 

  1. In late 2016, we sponsored research by the Think Tank, Policy Exchange, which found that in order for the benefits of the apprenticeship system to be realised, the government needs to put quality at the heart of all apprenticeship programmes.

 

  1. Over the last three years, our KPMG360° apprenticeship programme has become an increasingly important part of our own recruitment strategy. Ensuring quality of apprenticeship provision has been at the heart of our offering. Recruiting a combination of graduates and apprentices encourages a wide range of people with different skills and experiences to join us – all of which contributes to the diversity of thought we are able to offer our clients.

 

  1. Our KPMG360° apprenticeship programme was awarded the 2017 British Accountancy Award in the category “Best Graduate and Non Graduate Programme”.

 

  1. As a firm, we are mindful of the regional inequalities which exist in terms of access to opportunities, particularly for those from a low socio-economic background. As a result, two thirds of this year’s apprenticeship roles within KPMG UK are based in regional offices as we continue to invest heavily in our regional business.

 

 

Areas of inquiry

 

  1. Our response addresses three of the suggested areas; the quality of current provision, the role of the Education and Skills Funding Agency (ESFA) in ensuring value for money and quality of training received by the socially disadvantaged.

 

  1. This submission reflects our insight from both teams providing advice and service to clients as well as our experience from our own apprenticeship provision.

 

The quality of current provision, how this varies by sector, level and region, and the impact of this on learner outcomes

 

  1. KPMG have discussed the levy with numerous, generally large organisations from a diverse set of sectors. Through these conversations we have identified a number of issues. 

 

  1. There remains a perception that apprenticeships are for vocational school leavers rather than work-based education opportunities at all levels for all members of staff. In many cases this failure to understand the breadth of apprenticeships often extends all the way up to senior leaders. In instances where understanding and expertise does exist, these individuals are not generally positioned to influence the strategic decision making required to deliver the type of investment and change required to spark an increase in the number of apprentices.

 

  1. The stipulation that 20% of training be ‘off-the-job’ is a deal breaker for many low margin organisations who cannot afford to lose staff for this amount of time or are working to irregular schedules. Having a blanket 20% approach is widely seen as inflexible and hard-line, while guidance on how this can be managed is missing. 

 

  1. Introducing apprenticeships to an organisation requires investment.  For those new to apprenticeships, this means additional and often new capabilities are required to manage: providers, on-boarding, pastoral care, coordination, line management and education, amongst other.  This is investment of time and cost goes beyond the funding raised and made available by the levy. 

 

  1. As a result, for many organisations, it is easier to instead receive a charge than to invest additional resource to what is often perceived as a non-strategic change to their organisation. The lack of supporting figures which outline the return of investment of apprenticeships, especially within individual industries, makes it harder to put these business cases together.

 

  1. KPMG believe there are benefits to using apprenticeships to fulfil strategic workforce needs.  However, many companies just want a straightforward way to fill immediate skills and capability gaps.  Presently, despite the levy, apprenticeships are perceived as too complicated to fulfil this need.

 

 

 

  1. The funding policies, guidance and requirements around Apprenticeship provision are complex.

 

  1. As on-the-ground experience of Levy delivery emerges, we appreciate things will become clearer. However, presently, understanding the implementation process for the Levy requires employers to have a mature understanding about how their resourcing and skills requirements can be met through the acquisition of Apprenticeship Standards. This is not always the case.

 

  1. Funding for Apprenticeships only covers programme delivery. Providers are not financially compensated to work with employers to develop targeted programmes that would better meet their skills needs. As a result, providers are tending to deliver ‘off-the-shelf’ programmes, which may not suit employer needs.

 

  1. A solution to this would be to change the way that programmes are funded. We would suggest some Levy funds be ring-fenced and be made available for providers to develop programmes within a set standard. These would then be assessed by Ofsted looking at whether a robust training needs analysis has been undertaken for each employer.

 

  1. The requirement that providers deliver Information Advice and Guidance (IAG) to learners should be redirected. We would recommend introducing a funding requirement for providers to deliver an equivalent service for employers; this could be in the form of a training needs analysis.

 

  1. Finally, a learner’s eligibility for a pathway is not required to be assessed until after they have been assigned to an employer through the National Apprenticeship Service (NAS). This is a major barrier for employers, as it impacts on their ability to assess the real cost.

 

  1. The Government has provided extensive support to organisations potentially entering this market over the past eighteen months. However, more support and clarity is needed.

 

  1. The poor timeliness and lack of clarity of apprenticeship reforms has led to some issues around quality and compliance. Previously, late production of guidance and supporting documentation has been problematic. Changes for 2018 have still not been communicated, and yet providers may require more than nine months to implement reforms, particularly if they are complex.

 

  1. An example of this is the question as to whether an employer is able to utilise their own levy pot in order to support apprenticeship and training provision within their supply chains. This reform could have a significant impact for a number of providers, but will clearly be a complicated administrative process for both providers and employers if they are to be ready for August 1 2018. It is therefore important that the practical implications of these and other changes are robustly assessed and well communicated.

 

  1. To date, the guidance provided to employers has been largely through public announcements and press, while there has been some targeted support for larger providers through the NAS. This has worked to mobilise employers already engaged in delivery of Apprenticeships or those incentivised/mandated to provide them, e.g. many Public Sector bodies, but few others.

 

  1. Similarly, many employers are not happy to enter the market as employer providers (supporting their own workforce needs/provision) or as main providers (training providers for other employers) due to the significant reputational risk of a detrimental funding audit and/or negative Ofsted reviews.

 

  1. The information made available through FEChoices on training provider quality is limited.

 

  1. Learner surveys, while publically available and used by Ofsted, lack sufficient information required for employers when reviewing provider quality.

 

  1. Searches for Apprenticeship training providers via the FEChoices site fail to link to specific provisions, which can be misleading. An improvement, for example, would be linking qualifications being searched for with the number of successful starters on that course per provider.

 

  1. Another improvement would be a reasonable view of provider capacity, in terms of participant numbers and geographic spread. This would allow for employers to assess the capacity of a provider, the extent of provision delivered and the success thereof in various locations.

 

  1. For those leaving school without at least an A*-C/4-5 in English and maths, apprenticeships are not the right pathway for catching up in these subjects and progression.

 

  1. There is an ongoing concern that students who require English and maths catch-up provision are currently ‘forced’ to re-sit as a part of the governments conditions of funding when looking to participate in an Advanced Apprenticeship.

 

  1. While the move towards meeting this condition through the achievement of a Level 2 Functional Skill in English and maths is positive, the integration of re-sit provision into apprenticeship pathways feels forced. Weaving English and maths learning into apprenticeships, through contextual and more job-related approaches, would benefit employers, providers and learners alike. 

 

The role of the Education and Skills Funding Agency in ensuring value for money, and the impact of different funding models

 

  1. Resource levels within the ESFA have reduced considerably over a prolonged period.

 

  1. The complexity and diversity of training provision and the provider base has increased, even more so since the introduction of the Levy. While there is always a need to balance the cost against the benefit of oversight, the education and training sector has a track record of not managing significant new initiatives well (for example Individual Learner Accounts and Train to Gain). We would encourage the Government to consider this carefully as the Levy develops, as particular complications may exist when the supply chain rule comes into place in April 2018.

 

  1. The lack of clarity over the assurance via funding audit is also problematic as there are several new and complex rules designed to maintain the quality and consistency of the Apprenticeship experience, yet there is no clear indication as to how this will be monitored, measured and evaluated. Equally, the lack of timely interventions will likely result in the proliferation of non-compliant processes and activities across the sector that will need to be unpicked when the assurance programme is implemented later in the year.

 

  1. While we understand the ESFA’s focus will be on new providers, we have concerns with existing providers, especially those with a poor track record in delivering Apprenticeships. A significant issue lies in the expectation for providers to undertake due diligence as part of any and all contracting processes, yet this goes unmonitored.

 

  1. The ESFA has maintained the need for providers with subcontracts above £100K to have annual assurance over their provision from an external agency. We feel this is a limited process. Instead, we feel the ESFA could minimise their risk by increasing the mandatory expectation of external audit to all providers who have Apprenticeship funding above £100K and for employers to be mandated to undertake a prescriptive due diligence prior to contracting for provision.

 

Quality of training received by the socially disadvantaged, and barriers to them undertaking this training

 

  1. A focus on quantity over quality is stifling progress.

 

  1. While having a target for apprenticeship starts over the course of a government shows commitment to the cause, the seeming focus on quantity over quality remains a concern. This coupled with the speed of reform, and underlying concerns of guidance and best practice amongst employers is proving a continued problem.

 

  1. The reduction in apprenticeship starts in 2016/17 should not be automatically attributed to the introduction of the Apprenticeship Levy – we believe opportunity lies in this reform. However, the fact that the number of under 24 year olds who started an apprenticeship last year is at its lowest number since 2009/10, and that the overwhelming majority of these starts are at a Level 2 or 3, is of concern.

 

  1. Young people from low socio-economic backgrounds face significant barriers to high-quality apprenticeships.

 

  1. Firstly, there is a data gap in terms of understanding how many individuals from disadvantaged backgrounds are starting, achieving and progressing within apprenticeships. Without this, there lacks a public benchmark from which to measure the current gap between disadvantaged young people and their better off peers.

 

 

  1. There are numerous well-cited barriers which individuals from low socio-economic backgrounds face, such as availability of opportunity and general understanding of apprenticeships and the routes to progress they represent.

 

  1. Those from less advantaged backgrounds are likely to have less opportunities to gain professional work experience, and have limited exposure to the professional world. Poor salaries paid on many apprenticeship programmes limit those who cannot rely on support from their parents from applying. Additionally, many of these parents will have a limited experience of the professional world, and therefore minimal understanding of the breadth of apprenticeships now available, particularly at higher levels. This means teachers are likely to be an important influencer.

 

  1. Most apprentices tell us that university was the most promoted route to them at school and many have described being discouraged to apply for an apprenticeship programme by their teachers. Research suggests teachers and Head teachers are often ill informed on the topic of apprenticeships, with many not recognising such programmes as a genuine alternative to university. We appreciate that efforts are being made by government to widen understanding of apprenticeship routes amongst teachers. However, to meet the ambition of parity of esteem between academic and vocational routes, significant culture and attitudinal shifts are required.

 

  1. We also find that those from less advantaged backgrounds tend to lack confidence, often ruling themselves out of application processes before attempting a start. Recruitment processes that focus on a traditional/corporate view of “impact” are likely to be biased against such individuals.

 

  1. As part of our recruitment strategy, we try to negate this by focussing a large proportion of our work experience offering on young people eligible for Free School Meals and encouraging allowances for minor discrepancies within our apprenticeship application processes. But, we also appreciate more can and should be done more widely and across all sectors. 

 

  1. The absence of a strong technical route to employment has contributed to poor social mobility, a lack of diversity in large organisations, and a growing national skills gap.

 

  1. Reforms to apprenticeship provision over recent years have been welcome. The rate and speed of change has been a cause of concern to many, particularly organisations with little to no experience of delivering apprenticeships but now subject to levy payments.

 

  1. Our KPMG360° programme has proven a success due to the investment we, as a firm, have made beyond the funds generated by the levy. This additional resource has allowed us to develop a programme based on a well-thought out strategy, that applies a targeted and inclusive recruitment approach and which provides learners with a tailored and supportive experience.

 

  1. Organisations without a clear vision, in-house expertise or access to additional funding will struggle to emulate programmes like ours, but still carry a burden of expectation. The technical routes and programme funding alone are not a panacea as there is still further education on the benefits and investment required. 

 

  1. We have shown it can be done for accounting, however other industries need to have tangible benefits and a roadmap to implementation presented to them to encourage take-up. Without this additional support, apprenticeship targets may not be achieved and issues of poor diversity and social immobility will continue.

 

 

 

  1. Below we have provided an outline of what KPMG does to integrate apprenticeships into our organisation in a way that supports our social mobility and inclusion agenda and helps develop all our apprentices into effective contributors to the business.

 

KPMG360° is a high-quality, long-term programme designed to ensure retention and progression.

 

  1. KPMG360°, which launched in 2015, is a three or six year apprenticeship programme offering varied work experience and professional qualifications (up to level 7), and a permanent role from day one.

 

  1. Apprentices spend their first three years rotating around KPMG’s varied business functions whilst studying towards the AAT (Association of Accounting Technicians) Level 3 and 4. Apprentices can then opt to step off the programme, and take on a role relevant to the skills and experience they have gained. Alternatively, they can specialise in Audit, Tax or Advisory and progress to level 7 status. Entry requirements are a minimum of 104 UCAS points (e.g. BCC at A-Level or equivalent qualifications). 

 

  1. KPMG360° Business Services, launched in 2013, is a 15 month apprenticeship programme offering a Level 3 qualification in Business Administration. Apprentices work in one of our support functions (secretarial, facilities or graphics) and receive mentoring and support to aid their transition into the workplace. Upon completion of the programme, apprentices who wish to are supported to apply for permanent positions at KPMG. Entry requirements are 5 GCSEs A*-C including Maths and English (or equivalent).

 

KPMG360° has clear business goals.

 

  1. Apprentices are subject to rigorous performance management processes and receive regular coaching. Data from performance reviews and exam results continually informs our learning curriculum and teaching. KPIs include percentage of chargeable work undertaken, exam pass rates and retention levels. Apprentices with exceptional exam and business performance have the option to fast-track to complete their apprenticeship a year earlier.

 

Our diversity objectives are equally thorough.

 

  1. We have defined targets for recruitment and retention from different groups, including a bespoke algorithm for targeting schools based on socio-economic disadvantage and educational attainment. We measure the volume and diversity of apprentices, and continually review and improve our communication channels and recruitment.

 

  1. As part of our commitment to best practice in apprenticeships, we publish diversity data on gender, ethnicity and socio-economic background of apprentices in our Annual Report, along with details of progress towards diversity targets at senior leadership level.

 

 

Our programme gives apprentices the vocational qualifications, cross-functional skills, varied work experience and networks necessary to thrive in today’s connected world.

 

  1. The five key pillars of the programme ensure smooth progress that meets the needs of both apprentices and the firm, offering strong support and guidance to help them make the best career choices, involving:

 

 

KPMG360° has proved a success.

 

  1. In 2017, 181 school leavers joined our apprenticeship programmes, including more than 70 percent from disadvantaged backgrounds, up 40% from 129 in 2016. They are making tremendous progress, with more than 96 percent of those joining in 2016 being retained by the firm.

 

Our recruitment strategy is attracting huge interest.              

 

  1. In 2016/17 over 600 individuals attended events in our offices across the country, while 190 used our Online Live Chat facility to speak to current apprentices and staff. KPMG360° attracted over 1450 applications in 2017, with students citing the opportunities provided by rotations as a key reason for applying to KPMG over competing firms.

 

We share our experiences.

 

  1. KPMG are sponsors of the All Party Parliamentary Group on Apprenticeships. This year, three of our apprentices and two our staff leading on the internal and client-side of apprenticeships have presented at APPG sessions; the group’s annual report launch; and Labour and Conservative party conferences, providing insights from the daily experiences of a young apprentice to the future of the world of work.

 

  1. KPMG’s Head of People, Anna Purchas, is a member of the Finance, Legal and Accounting Panel at the Institute for Apprenticeships and Technical Education, and we have representation on the National Apprenticeship Diversity Champions Network as well as the Professional and Business Services Council’s Skills and Inclusion Working Group.

 

  1. KPMG recently became a Department for Education Skills Partner, with our Head of Social Mobility sharing the firm’s experiences of diversifying our talent pipeline through apprenticeships, at the Department’s inaugural Skills Summit.

 

Apprenticeships can be transformative – we will continue to develop our provision

 

  1. As a result of the success of KPMG360° and the changing needs of the business, we this year expanded our offering, and launched KPMG360° Digital – a technology focussed degree apprenticeship, for the 2018 intake. To date, we have received approximately 1,600 applications for 157 KPMG360° and KPMG360° Digital places so far.

 

 

January 2018