Digesting the Comprehensive Spending Review
I can’t remember an autumn statement and comprehensive spending review that has been so nervously anticipated. Everyone involved in skills – from employers to the FE sector – have braced themselves in the knowledge that significant changes are just around the corner.
Within George Osborne’s speech, there appear to be some cautious positives for the skills agenda: 16-19 fully funded skills provision is protected and FE budgets for adult skills remain unchanged in cash terms. The government holds fast to its target for 3 million apprenticeships by 2020. Support for individuals to pursue skills development has also been increased with the extension of tuition fee loans and maintenance loans being opened up to support part time students.
But as always, a very different picture can emerge as we plough through the detail and the practical realities come to light.
The predictions of many were confirmed in the extension of the apprenticeship levy to a much wider catchment of employers. Most had understood it would apply only to ‘large employers’ based on the accepted, official definition. However the government has in fact always been careful to refer to ‘larger’ employers, in effect recalibrating the definition of company sizes by introducing a new tier of ‘larger’ employers with a wage bill of over £3 million. This means that many medium and even smaller companies – some in the 50-100 employee bracket – will become liable to pay the levy.
Shock ripples will no doubt be created across industry as the implications are realised.
Many employers I speak with have simply not realised they could be subject to the levy. It will come as a big surprise and preparing for the levy and ensuring their companies can reap the value of it will take time, resources and require expert support.
For those companies who fit the new definition of ‘larger employers’, the levy will equate to a 4% increase in corporation tax and may, initially, be a hard pill to swallow.
One progressive company we have been supporting has 230 employees whose payroll means they will have to make a significant levy contribution. They have committed to researching and developing a robust and effective apprenticeship programme, with valid and relevant qualifications to ensure they get at least what they pay in, if not more back, in terms of value-added, increased profitability and a more highly skilled workforce.
But for most employers, who suddenly find themselves liable for the levy, they won’t be so far along this journey.
UK industry, however, is made up of sectors and companies that have long seen the true value of apprenticeships and a significant number of employers – especially the larger players – have been investing in skills and apprenticeships, irrespective of a levy. Mr Osborne’s claim that “those paying it [will be] able to get out more than they put in,” will be understood by many employers in engineering and manufacturing, who have experienced the real value apprentices bring to their businesses.
As an awarding organisation with a detailed grasp of the intricacies of apprenticeship design and delivery, one of our primary concerns is ensuring quality. In our experience, big targets – putting the focus and pressure on achieving numbers (the 3 million figure is reiterated constantly) – puts pressure on quality.
Hopefully this will not be the case in industry and EAL is committed to rigorously defending quality.
EAL and our parent body, Semta, are also lobbying hard to ensure monies raised via the levy from our sectors – sectors whose success is fundamental to the UK economy – stay within our sectors. This is vital if the commitment and investment in industry skills by employers is to be built on for generations to come. Equally, it is vital to the UK economy as a whole.
With the increase in loans being made available for tuition and maintenance, we’re also likely to see a shift in the onus for funding skills, professional development and qualifications, to the individual.
The challenge for EAL will be to ensure every aspiring learner with ambitions to enter and progress in industry, knows the importance of making the right choice in their qualifications. Qualifications designed with, vetted by and recognised by employers will carry much greater weight when they come to apply for jobs and progress in their careers.
We have a tendency in our country, to revert to a generic, old school terminology when we refer to vocational qualifications. The phrase ‘I’ve got my City & Guilds’ is applied almost as ubiquitously as the term ‘Hoover’ is to every other make and model of vacuum – no doubt much to the chagrin of modern day market leaders such as Dyson. Industry employers have long recognised and opted for EAL as the provider of choice for qualifications in industry. We now have to ensure that learners, parents and teachers receive this message loud and clear, to ensure that individuals pursue the qualifications that industry employers want.
Qualification choice must become a conscious decision for the learner, to ensure they buy the best passport to employment in their chosen sectors. That’s something our teams will be looking at very closely over the coming months.
I’d like to end these musings by making an important point.
Amidst a rapidly evolving skills landscape, amidst the ambition to create opportunity for all and amidst all the change and uncertainty in achieving it, qualifications remain a solid currency. For individuals, qualifications are their ticket to career progression and for employers, they provide confidence and assurance. Employers in industry have stated their need for and commitment to qualifications – both at the heart of apprenticeships and in their own right. Our job at EAL, and our commitment to our industry employers, providers and learners, will be to ensure their relevance and quality as we move towards 2020 and beyond.
For employers seeking support to develop apprenticeship programmes and make the most of the levy, EAL experts are on hand to help on 01923 652410 or email@example.com