Boost for SMEs keen on employer-led skills, but they have to pay

Posted on 30 Jul 2013

Skills minister Matthew Hancock has told FE colleges the government will create a new £100m Employer Ownership Fund, where companies must pay to qualify, and that £360m savings can be realised from adult skills provision in 2015-16.

Mr Hancock has written to the chairs of FE and sixth form colleges following the Spending Review, informing them of the government’s plans to extend the work of the Employer Ownership of Skills pilot with a new £100m fund.

This fund, expected to start from 2015, will co-finance investment in skills from both employers and training providers, building on the Employer Ownership Pilot which funds skills provision directed by employers who have to make a contribution.

The government’s Employer Ownership for Skills (EOS) pilot will discontinue in 2014 after the second round of bids has been awarded. The UK Commission for Employment and Skills says that ministers and the Investment Board last week offered support to around 40 bids, “within the constraints of the funding available and subject to the contracting and due diligence which is taking place now.”

The Department for Business, Innovation and Skills will announce the winning Round 2 bids in September. The EOS pilot has a budget of £250 million.

Extending the Employer Ownership scheme into a new £100m fund will be a boost to companies and supply chains keen to develop their own training programmes internally. Both rounds of the current Employer Ownership of Skills pilot were heavily oversubscribed; in Round 2, 314 bids were received with 40 likely to be awarded. The new employer fund potentially gives some losing bids a second chance to apply for funding.

Last week, the government announced a consultation on Apprenticeship Funding that proposed three models of funding. Each model had a common theme, that employers would have to contribute towards the cost of the project to be eligible for the funding.

“The common theme in all government skills schemes in recent months has been this shared contribution feature,” says EEF’s skills expert, Verity O’Keefe. “Under each model proposed in the Apprenticeship Funding consultation, a provider cannot draw down funding without a demonstrable contribution from employers. Manufacturers are used to paying their way so member feedback has been positive.”

The skills minister Matthew Hancock also told the FE and sixth form college chairs that the government has identified £360m in efficiency savings and reform in 2015-16.

He said “This includes a saving of £100m that comes from implementing the existing Advanced Learning Loans programme to replace grant funding for publicly funded learners studying at level three or higher over the age of 24, and £100m reprioritising funding that was previously underutilised or did not directly support participation, and removing funding from low value qualifications.”

While these efficiencies may total £360 million, it is possible that cuts will need to be made to existing government-funded skills and training providers as the emphasis on skills provision shifts very much to an employer-led model, away from a pure service provider model.

Mr Hancock also told the FE college chairs that the government has secured an agreement to extend traineeships – the pre-apprenticeship stage for employability training – up to age 24, and more funding for the Apprenticeships organisation.