Secret Lecturer: Topsy-turvey skills funding begs a second look
I’ve been struck by the budget announcement that the government will now pay 95% of apprenticeship training costs incurred by SMEs - a 5% increase. First of all, it’s was a re-announcement so the chancellor is getting mileage out of something already made public. Secondly, it was tactically crass to pre-announce it because anyone motivated by that amount of financial change would have held back until now.
What astonishes me is the difference between the 95% state funding an employer receives to fund apprenticeships and what most individuals have to pay if they want to train independently - if you don’t fall into a certain category, you have to either pay half the full cost yourself or take out an FE loan to cover the full cost. I’d mentally put that alongside Sir Alan Tuckett rightfully asking why it seems England has tried and succeeded in wrecking its adult education.
Tax breaks for the rich, austerity for the poor
But the contrast is reflected in this notion of corporate welfare we’ve got - tax breaks for the rich and austerity for the poor. Many in the sector get the wrong end of the stick here; I support the apprenticeship levy but see it as a payroll tax with a few sweeteners. Employers are not doing enough training so a tax proportional to the number of staff they have seems a reasonable way of picking up some of the cost - and if you do good-quality training of the sort the government approves of you can offset that against the tax.
You've got to nail it down tightly otherwise it just becomes a bureaucratic way of companies claiming back what they have already paid. So many people in FE are saying employers must be given more flexibility, they are not spending it all. Yet surely the name of the game is getting it spent on things we value? If employers don’t do that, why should it not be available to the rest of us to pay for apprenticeships or other sorts of training? If big employers companies don’t spend it, redeploy it to support SMEs or individuals.
Slap a payroll tax on well-off SMEs
Why should that not come out of the levy, which I’d extend to medium size ones as well? I’d slap a payroll tax on most SMEs such as doctors, lawyers, estate agents, vets, accountants - none of them known for poverty though there are a good number of struggling SMEs out there.
SMEs can now get 95% of the cost of sending a senior manager on an MBA costing around £27,000. By contrast, it’s really hard to get young people into skilled employment.
Another thing that winds me up is people saying we must overcome the snobbery about apprenticeships. Maybe - but what is really holding people back is lack of places for 16-18s. The big issue is a distraction from the business - employers don’t want to be distracted. That’s why we need the alternative route of T-levels.
We can’t treat T-levels the same as apprenticeships
It’s understandable but what a bad move that we put the same constraints on T-levels as on apprenticeships. Insisting that you must have substantial employer placement rules out apprenticeships in many areas that lack enough employers - and T-levels will suffer the same fate. If, say, you are doing any sort of electrical engineering T-level or apprenticeship, then any sort of engineering or indeed manufacturing placement ought to be good enough.
Returning to the idea of a payroll tax, apart from the 5% giveaway to employers, the budget has offered nothing about meeting the acute shortfall in FE funding. You must have an investment. Making the levy more of a payroll tax might help pay for investment in individuals as well as investment in firms.
We’ve also got to stop people saying employers need greater flexibility; that employers need to be able to choose to spend it on their own internal training schemes but don't need to recognise qualifications or they need to be able to hand it to their suppliers and pass it down the supply chain. That’s just inviting the whole thing to be frittered away and not generate any additionality.
Where are all our so-called young apprentices?
They’ve got to accept the fact that the popular concept of an apprentice - despite National Apprenticeship Week’s publicised examples of young people getting into skilled employment, most of the money is going on employers’ existing staff.
Apprenticeships are supposed to be publicly-funded and so we have a right to say what sort of apprenticeships we want to see and what counts as an apprentice. I am particularly annoyed at people to say it's a tragedy employers are not spending all their levy money. It’s a tax, it’s public money, and if employers don't spend it, we will - that is not a problem. In fact, if they spend it all I’d have real doubts how much of that would be additionality. Much of it will be a substitution.
Of course, you always have to do ask is a young apprentice worth investing in for training or are they not going anywhere? But investing in people who have been there for 30 years? If it’s genuinely additional, great, but what if it’s just which bits of an in-house training programme the employer can badge as apprentices, in order just to get the money back?
Let’s put an age limit on ‘apprentices’
I also get impatient with those in education who say: “60-year-old apprentice? Wonderful! Never too old to learn”. I’d have an age limit on apprenticeships and say they are just for young people. I would then have a separate debate about how far we want to invest public money in training older people.
Why do we pay an SME 95% to train an older employee and yet expect another older person to pay out 50% or 100% of costs to upskill themselves maybe in an attempt to leave a rubbish employer?
Why should the levy be restricted to apprenticeships? Why don't we use it for T-levels, for young people, for adult training in colleges? Why not just use it as a payroll tax as a contribution to funding FE?
Unjustness of the funding system
How can they justify those prices for an individual and 95% funding for a firm? They never talk about them in the same breathe. If individuals want to spend that sort of money they must be genuine so why not help them out?
It’s hard to stump up cash yourself if you are one of a growing number of self-employed, zero hours contractors in the gig economy. The alternative is taking a government FE loan, which has not proved at all popular and really choked off demand.
There has been some movement. David Lammy MP has stressed the need to reinvent evening classes. Employers are taking decreasing responsibility for aspects of their workers’ lives - wriggling out of paying pensions, sick pay and holiday pay through zero hours contracts, showing dwindling interest in training workers.
So shouldn’t we be saying: let’s invest in individuals, let’s help them invest in themselves, and let’s tax employers who use skilled or unskilled labour?