Has there ever been a more interesting, exciting, yet potentially worrying time to be in the game of delivering apprenticeships?
It’s interesting, because of the size and shape of the changes coming up on our horizon. It’s exciting because after all whether we be an employer, a private or third-way training provider or a college, apprentices provide a substantial income stream (£2.5 Billion), and hold significant revenue generating potential. It’s also worrying because the many unknowns bring business uncertainty.
The focus here is on the delivery capacity; and those collective training providers that must prepare for change and shift rapidly, some more than others, to remain ahead in the game, and even to remain profitable. After all, 3 million apprentices brings significant funding and earnings potential, and thus in this otherwise challenging FE sector presents a great opportunity to build business and increase profitable market share.
The English Apprenticeships 2020 Vision signals a huge shift in emphasis. An apprentice can no longer be a ‘pile it high, deliver it cheap’ commodity where she/he is viewed through a financial lens over a qualitative one. For the first time the training provider is no longer in the driving seat as the main event. The employer will now hold the trump cards of choice of delivery partner, choice of delivery method and choice over where the money is spent! Reforms demand an ’emphasis on quality and rigour’ that, when coupled with a minimum of 20% off-the-job-training point towards more of the funding rate(s) being applied to training than to management fees, administration, contract compliance and bureaucracy. This sets the scene and also the challenge to all in the delivery chain; including some that will claim that it is hard enough currently to make a fair, acceptable profit from available funding.
So the scene is set for the ‘Battle of the Delivery Space’. We have on one side of the ring, a college-led FE sector already in some turmoil, and about to lose chunky volumes of funding, much of which has historically been contracted-on at a margin, pitched against the naturally more agile competitor, being the private training provider, to try and protect existing and win new market share, to replace core funding cuts elsewhere. Who will win? The Skills Minister urges colleges to redefine themselves in order to stop other training providers ‘nicking their lunch’. I think that private training providers are unlikely to give up their lunch either and will surely raise their standards further in terms of quality and compliance. Waiting in the wings is a new competitor – the employers, that may opt for ‘a self service lunch’ and behind them are many potential new entrants that may find it easier in the new world to get on to the Register of Training Organisations. This will make it a busy space indeed! The ability of employers to source their own apprentices may well knock out one of the key reasons for engaging with colleges and other training providers in the first place?
So, I need to get to the point. Whatever funding is available (and we can only assume that future Standards will be broadly in line with current frameworks in overall funding / I&E-terms) the various component members of the delivery chain must work smartly and cost-effectively in order to win business and to deliver it profitably. The basic elements of both inefficient and efficient delivery won’t change.
Providers are often constrained with fixed, inflexible staffing costs. In colleges, high cost pensions and greater fringe benefits increase this cost further and limit delivery. Low caseloads in fringe frameworks are commonplace in the college sector; determining and maintaining what is a solvent caseload is essential – I suggest a viable caseload has to start with a 4 and possibly even a 5 in future (for those non-niche and lower value standards). Where caseloads are small, deliverers should avoid the temptation to over-assess; there is no evidence that quality rates improve – but the assessor may feel better as it fills the timesheet with a sense of worth!
A caseload of only 50% capacity doubles the delivery cost; throw in an average or even below average completion rate and the transaction soon shifts from profitable to loss-making – putting further pressure on quality.
In terms of the component parts of delivery, many a competent vocational assessor stalls over the delivery of Maths and English; understandably this can be right outside of their comfort zone. Apply the ‘Horses for Courses’ principle and look to add in specialist delivery where it cannot be skilfully embedded. Also, keep an eye on the clock; poor timeliness not only affects reputation – it costs money as at this point you are working for free, and heading for potential wastage.
I recommend that you look to simplify the systems of recording assessment and achievement; optimise ICT and ensure that Out of Area visits are co-ordinated to minimise travel and subsistence costs. ‘One File’ and ‘Smart Assessor’ are but just two products that can transform delivery from a manuscript process to a highly digitised one. Above all, the delivery may be completed and claimed (following a different funding-flow in future) – but if it does not withstand critical review and audit scrutiny then it is at risk of claw back. Many providers have come unstuck because they got the basics of eligibility, record-keeping and on-programme management wrong!
Of course, there is still money to be made! Work to a costed delivery model that delivers your target ROI and is sensitive to failure – know the breakeven point. This is a concept better understood by some private training providers over some colleges. Know your numbers, plan them and monitor – Success, Retention, Timeliness, Caseload, Staff Utilisation = Profit (or Loss!).
Staffing will always be your most expensive outlay. Look at flexible options that avoid fixing high costs. There are several options out there, and Protocol offers a number of solutions to choose from. Manage non-staff resources well, optimise IT and protect earned income via the risk of audit claw back.
In summary, the future is indeed interesting, exciting and potentially worrying. Notwithstanding Apprenticeships offer real (and almost unique) opportunity to grow volume, and volume offers the chance to grow profit – but only if you have the systems and approaches in place now to manage in future. My advice is to worry less about the intricacies of the new funding methodology (that will be what it is) and to use the time left to ensure that your delivery-business is well-aligned with your employer customer-base (including larger employers that may be considering self-delivery) and that you are as efficient and effective as you can be to remain commercially competitive when the regime that we have mastered for some years now undergoes the planned radical changes.