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Shifting the paradigm of apprenticeship procurement

One year before the new apprenticeship targets and levy come into force, Tom Storey, director at K10, outlines how public sector bodies should view the reforms as a procurement opportunity rather than a burden. Luana Salles reports.

In a keynote speech delivered in Burton upon Trent in December last year, prime minister David Cameron set out the government’s policy to ensure that apprenticeships formed at least 2.3% of all public sector bodies’ workforces and contracts by April 2017. This was announced less than a month after similar policy changes in November’s Spending Review introduced a new ‘apprenticeship levy’ of 0.5% on all bodies with wage bills of more than £3m. 

These procurement targets were created to support the government’s ambition to create three million apprenticeships by the end of the decade, but were not entirely well-received at a local level.

In September, the British Chambers of Commerce said the requirement for businesses bidding for public contracts to show a “clear commitment” to apprenticeships would only add red tape to procurement opportunities for SMEs, who would view that as “yet another hoop they have to jump through in the already complex world of doing business with the public sector”. 

In October, a paper presented to the LGA’s People and Places Board showed local authority leaders were being encouraged to oppose centrally imposed targets. More recently, in March, the LGA said the reformed policy would cost councils £600m, with less than 10% of them exempt from paying the levy – which, they argued, should be devolved and pooled locally. 

But are these changes as bad as they seem? Tom Storey, director of apprenticeship training agency K10, argues differently. Speaking from his experience at K10 – which partners with public bodies and contractors to help deliver apprenticeship programmes – he said both the target and the levy may seem daunting at first, but will prove beneficial in the medium to long term. 

“I don’t need to manage the finances of a public body, so I can only imagine how difficult and challenging that must be. And I can also see how, in the short term, this target could be something that’s seen as difficult for them to deliver,” he told PSE. 

“But in the medium to long term, it’s good for the public bodies and their ability to meet the skills gap they have, because the training provision will have to reflect what they are saying is needed. That’s the big shift that people aren’t necessarily seeing at the moment.” 

Bringing about a paradigm shift 

Arguing in favour of the levy, he said the reformed policies could bring about a paradigm shift in people’s perceptions of apprenticeships – which, he said, has not been so positive in the UK. 

“Unfortunately, for a long time – and it’s not only public sector bodies, but private too – there hasn’t been much of an emphasis in the UK on apprenticeships as there has been in other countries around the world.” 

This contrasts with other developed economies around the world, Storey said, such as Germany and Australia. “Anything that creates an incentive for organisations to employ more apprentices is a positive thing, because if you look at some of the countries around the world with the highest levels of productivity, they’re also countries that have a higher percentage of their workforce employed as apprentices,” he added. 

Not a burden – an opportunity 

Storey suggested that creating public sector targets is, at present, the only way to change the apprenticeship landscape. “Speaking to the many councils we work with, we know they are under huge amounts of pressure and huge amounts of strain in order to deliver the services they want to deliver,” he said.

“In that kind of environment, it could be difficult to see how, given that they need to make lots of cost savings across a number of different areas, anyone would necessarily suggest that they should prioritise the importance of apprenticeships.” 

The important thing, he said, is to look at it from the perspective of autonomous skills shaping that the targets create: public sector bodies will be in a position to tell training providers exactly what kind of training they need and the areas they must focus on. 

“If you look at it from that perspective, it almost isn’t seen as burdening the public sector with even more challenges in an environment where they’re getting less money,” said Storey. “It’s almost a way of supporting them to try and look at addressing some of these problems that they feel have been there for some time. The sense I get is that in both the public and private sector, for a long time people have been talking about skills gaps, and the fact that training doesn’t meet industry needs. This is the key to turn it around. 

“Rather than seeing it as a new target that’s imposed on them, public sector bodies should see it as an opportunity to understand the skills gap that exists within their particular area, and how, if they work collectively and collaboratively, they can address those gaps and have the purchasing power to procure training over the medium to long term that meets those needs.” 

A practical example of this is the existing skills gap in revenue and benefits offices, which have now become an expensive cost to councils as a result. “If one of the consequences of the levy is that councils then put in place strategies that enable them to engage with individuals that may have changed careers or could move into that role, it not only benefits these individuals, but it also benefits the council, because they don’t then have to pay huge amounts of money to agencies to provide revenue and benefits officers,” Storey explained. 

Local benefits of vouchers 

Asked about the possibility of devolving the levy, as pitched by the LGA, Storey said this aspect of local control already existed within the new ‘electronic vouchers’ introduced in this year’s Budget. Through these vouchers, which pool government money that employers can then spend on apprenticeships, bodies will be able to decide exactly how funds will be spent regionally. 

“If you’re a large hospital looking after a particular area of the country where there’s a particular need or skills gap, your vouchers could be spent on one area of healthcare provision that is different to another part of the country,” he added, “because you have the ability to spend the vouchers in the way you deem necessary.” 

Business as usual 

Going forward, he said it is vitally important that all public sector bodies acquire the expertise they need in order to ensure apprenticeships are well integrated into companies. As well as abiding by new standards – which will be created by ‘trailblazers’, or groups of employers including at least one SME – it is important that bodies understand how apprenticeships fit within organisations so they become ‘business as usual’ rather than just a bolt-on. 

“The adoption of an apprenticeship strategy or a number of new training courses will only really be sustainable if the individuals within the organisation recognise that, actually, there’s a real acute need to upskill individuals into those roles,” said Storey. 

“It’s not about creating apprenticeships where there previously were just entry-level jobs. The whole point of an apprenticeship is that you are learning; there needs to be sufficient uniqueness about the course, and sufficient value for it to work for both the organisation and the individual going through training.” 

Importantly, this includes extensive understanding of training needs analysis, PESTLE (political, economic, social, technological, legal and environment) analysis, and knowledge of all the changes affecting the organisation, he said. 

“Unless you go through that exercise, it’s difficult for individuals to see how they just integrate apprenticeships into their workforce.”

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