Holt Review: apprenticeship delivery is failing the employer

Posted on 29 Aug 2012

The delivery of apprenticeships to SMEs urgently needs simplifying and an image makeover if smaller firms are to get the trainees they want, and schoolchildren are to be attracted to the apprenticeship route to work, says the Holt Review.

The government review by Jason Holt for making apprenticeships more accessible to smaller companies has concluded that the apprenticeship delivery system is too complicated, it fails to give employers enough power in shaping their own training needs and that the apprenticeship at an SME is still a largely attractive route into work.

The review, published Monday, calls for SMEs to have more control over what providers deliver, and that providers operate in a more competitive environment.

Mr Holt contends that while enough stakeholders and providers in the market exist, they are competing ineffectively for the end customer – the SME – and often provide conflicting advice.

Businessman Jason Holt, who started his own training centre for jewellers because of a dearth of skills in the jewellery sector, said: “Many interviewees have told me that, while they are supportive of apprentices, they don’t think they are right for their own companies or sectors.  Equally, young people, parents and teachers are aware of the term “apprenticeship” but for many, their negative perception will mean that it will be a closed career option from the outset.  These perceptions create a major barrier.”

A central criticism of the marketplace for SME apprentices is in the structure of the funder-training provider-apprentice triangle. Colleges and consultancies who administrate apprenticeship needs to small companies are, in many cases, seen to offer prescribed apprentice candidates rather than find out the specific needs of the employer. Often candidates are unsuitable. Also these providers are meant to ‘doorstop’ SMEs to establish their needs but, some SME managers say, often they do not and wait to be contacted.

Speaking to the Daily Telegraph, the Education Secretary Michael Gove said Mr Holt was “certainly right that we need to give employers, and not training providers, the power and freedom to shape their apprenticeships, and make the process as simple as possible for every employer”.

What kind of solution is best for the SME base: with diverse needs, in small quantities?

Richard Bridgman, chairman of Warren Services and a regional chair of Semta in the East of England, advocates the managed apprenticeship model.

Having campaigned long and hard for government and engineering & skills organisations to recognise the specific training needs of smaller firms – which recruit the majority of apprentices in Britain – he says his formula hands over more of the burden of administration from the employer to the training delivery partner. It is also more measurable, where bodies like Semta can assess how effective their sub-contracted training providers have been.

“The pilot study that ran in the Midlands, under the Semta Apprenticeship Service or SAS, has had better results than anybody else,” says Mr Bridgman. “The colleges and providers are not always doing it efficiently, they are not reaching the companies they are supposed to. This method makes them more accountable to their paymaster.”

Another feature of the managed apprenticeship is the way funding works. At Bridgman’s company, the training provider for some skill sets, JLT Training, receives the funding from government but pays a large part of the money to Warren Services itself, which has been vetted as having adequate training capabilities. This avoids potentially wasting money and services that are can be ‘tick box’ exercises.

“In the past, nobody had access to these sorts of things because you had to have a ‘cove’,” says Mr Bridgman. “Say I start my own apprentice school – if approved – Semta would do all the funding, draw it down from government, they will then pay me to deliver their training in my workplace. And we’d provide other companies with training.”

Bridgman also questioned why the UK needed an another review on the efficacy of apprenticeships, being conducted by entrepreneur Doug Richard, as well as the adequate Holt Review. The Richard Review of apprenticeships is due to be published in the autumn.

Colin Larkin, general manager at Case New Holland, is investigating the managed apprenticeship model for his company, which employs 950 people in Basildon, Essex, and recruits several apprentices a year.

Does incentivisation work?

The Holt Review recommends that more SME companies should be encouraged to offer apprentices. In response the Government has modified the terms of the Apprentice Grant for Employers.

The grant, which encourages SMEs who are not recruiting apprentices to do so, will now open up to employers that have not hired an apprentice in the past 12-months. Employers will also be able to claim grants for up to 10 apprentices instead of three, and the scheme will be made available to businesses with up to 1,000 employees rather than the 250 workers previously eligible.

But some employers say the grant as incentive, and its eligibility period, misses the point.

Tony Hubbert, managing director of TF Automation, a manufacturer in Bradford, says apprenticeships are today “back in fashion”, from a time in the 1970s when large local employers in the Bradford area such as his old firm Renolds, offered 100 apprenticeship starts a year.

Since then, companies have reduced in size and what apprenticeship training has survived has become more generic. He says “its frustrating to be ineligible for the grant because in fact we have provided an apprenticeship scheme right through the ‘doldrums’ decades before these came back in vogue. It’s just that we haven’t taken an apprentice on in the prescribed period, because I only recruit to synchronise with a pending retirement and we haven’t needed to.”

Mr Hubbert, whose company makes special purpose machinery and pneumatic equipment, also queries the value of the incentive for recruiting apprentices. “£1,500 is helpful, but it really won’t offset the cost of a proper Level 3 engineering apprentice in a meaningful way.” He also says it comes at the wrong end of the work cycle as a reward. “You should hire an apprentice because your business needs it. It makes more sense to pay the AGE grant, and ideally more than £1,500, at a key stage such as completion of the NVQ Level 2 stage. It’s only after a recruit has reached the end of year 2 that he or she is actually contributing valuably to the business.

“Receiving the payment then, and another at Level 3 achievement, would make more sense as an incentive.”

Sector skills council Semta is supportive of the recommendations in the Holt Review while actually being one of the organisations the review is implicitly criticising, by saying the delivery landscape is complicated.

Stephen Lilley, head of apprenticeships at Semta, says “we broadly support and agree with all of the observations and recommendations in the Holt Review,” but maintains that Semta has made it a priority to try to simplify the process for SMEs.

There is a culture today within education and industry for hitting targets, in this case it might be a fixed number of apprenticeship starts per year.

Asked whether Semta has focused more on large companies than SMEs because these ‘blocks’ of apprenticeships are easier to deliver, Mr Lilley said “it would be reasonable for someone to make that conclusion, but we have not neglected SMEs. The Semta Apprenticeship Service was expanded from a service mainly for the metals industry to a wider engineering remit about 18-months ago and since then it has focused largely the SME sector by interviewing SMEs one-to-one and probing them for their specific needs.”

Mr Lilley conceded that much more work needs to be done to simplify the process for smaller companies, so they get the people and apprentice training that suit their business needs, and on the image of the apprentice route into work which the Holt review circled as a main barrier to helping SMEs with training.

David Way, chief executive of the National Apprenticeship Service, said: “Jason Holt’s review affords us a valuable insight into Apprenticeships from the perspective of SMEs.  It sets out what more we can do to encourage many more businesses to become involved with Apprenticeships.

“Taking on board what SMEs are telling us means we can be more confident that Apprenticeship programmes meet their needs.  We will simplify and speed up the process so that smaller organisations do not feel overwhelmed by bureaucracy.”