The UK Commission for Employment and Skills launched its bidding Prospectus for Employer Ownership of Skills on Tuesday 07 February 2012.

Previous Huckfield briefings on Employer Ownership Pilots have appeared here since Wednesday 07 December 2011.

The Bidding Timetable and details of Briefing Sessions are shown below.

Though Employer Ownership Pilots apply only in England, the Scottish Government will follow developments after recent references in policy documents to a lack of employer involvement.

The Scottish Government’s Further Education Consultation in September 2011 Putting Learners and the Centre: Delivering our Ambitions for Post 16 Education, on page 32 said:

“We will improve this situation, where necessary looking at radically alternative models which put employers in the driving seat”.

Background for Prospectus

As reported in previous Huckfield briefings, on Thursday 17 November 2011, the Prime Minister and Business Secretary Vince Cable announced the Employer Ownership Pilots initiative for England. Under the proposed £250mn programme, employers will be given the power to design, develop and purchase the vocational training they need. Vince Cable said then:

“We have to fundamentally alter the relationship between employers and the state – giving employers the space and opportunity for greater ownership of the vocational skills agenda, including the chance to bid for direct control of public funds”

Employer Ownership of Skills, a policy paper published by UKCES on Tuesday 13 December 2011 provided more details. Section 6 of the policy document says:

“Public investment will be provided directly to businesses, sitting alongside businesses’ own private investment, rather than following the mainstream public funding model.

“It will be open to proposals from businesses of  all sizes and from all sectors of the economy.  As part of the pilot, employers will be asked  to demonstrate how public investment would  be used to leverage business investment and  commitment to raising skills levels in their sector,  supply chain or local area and how they will support Apprenticeships”.

The Coalition Government Agenda

Employer Ownership Pilots represent the start of a gradual shift of public funding for employer led training and a new environment where through the Department of Business, Innovation and Skills, UKCES and the Skills Funding Agency, public funding acts as market maker. Rather than the Government’s keeping control or directly funding the training agenda for employers, increasingly, it wants employers to take the lead. Innovative suggestions include a public funding role in employer training as underwriting, as guarantor or for reducing risk.

The UK Government’s wider rationale is that 60% of employers already use private training providers. So employers been have subsidised to join Government incentives. But with unsustainable levels of public spending, the Government will now encourage employers to take ownership of their training agenda. This means moving from direct provider funding, based on qualifications, to employer-based structured investments and loans to leverage additional outcomes and work experience and moving from provider led to employer owned workforce development.

In other words, public funding will go directly to employers who will exercise their choice of provider.

Contents of The Prospectus

The Employer Ownership of Skills Prospectus February 2012  on page 6 “The Invitation” says that the full investment criteria, application forms and guidance will be available towards the end of February 2012.

Details of the Bidding Timetable and details of Briefing Sessions are shown below.

The Prospectus on page 6 continues:

“The Prospectus invites employers to develop proposals for improving skills, covering a wide range  of activities including:

  • Apprenticeships and wider employee training opportunities
  • Training and skills development to help people into work
  • Innovative approaches to the design and delivery of training and workforce development”

The Prospectus on page 6 continues:

“Proposals should set out:

  • The outcomes to be achieved
  • The rationale behind the proposition and why it cannot be done as successfully through existing funding routes/delivery channels
  • The mechanisms by which it will be delivered
  • The level of private investment
  • The public investment needed to make it happen”

Apprenticeships

The Prospectus continues on page 7:

“For example, successful apprentices will be expected to have:

  • Acquired one or more significant qualification(s) recognised to be important to the sector
  • Become competent in their current role
  • Been supported towards achieving English and Maths to the level of a GCSE A* – C where they do not already possess this
  • Good progression opportunities once they have completed, either in work or into further/higher education”

This is very much the Coalition Government’s agenda for vocational training and apprenticeships, beginning with Alison Wolf’s “Report on Vocational Education” in March 2011 and the Department of Business, Innovation and Skills’ FE Reform Series “New Challenges. New Chances”, the latest of which appeared on Thursday 01 December 2011.

Employers in Control

The Prospectus shows on page 8 that employers will be expected to be in control:

“Employer leadership and commitment: We want to explore through the pilot how we can improve the way that employers and individuals get the skills they need. We want to test new employer designed and delivered training and employment programmes. For example, proposals could include:

  • A clear articulation of the skills needs within an industry and why public funds are required to complement private investment
  • An employer definition for what quality is for a sector in skills and learning programmes
  • A package of employer designed training and assessment that meets both industry and employee needs
  • More sustainable models of funding training that encourage greater private investment alongside public investment
  • New methods of training delivery that closely align employer and employees’ needs
  • An employer-designed payment and monitoring system that safeguards public funds, demonstrates value for money and is simple for the business to operate”

These criteria show clearly that increased contributions will be sought from employers towards “more sustainable models of funding training that encourage greater private investment”. The need for “an employer-designed payment and monitoring system” favours larger companies. Many larger employers already have transaction and payment systems on to which Employer Ownership might be bolted. Though employers of all sizes from all sectors can bid, this part of The Prospectus favours large employers.

Collaboration

 The Prospectus shows on page 9:

“Collaboration can be demonstrated in two principal ways: employers working with:

  • their employees, trade unions and providers to ensure that any skills offer responds to employer and employee need
  • employers coming together to work in partnership”

The Prospectus continues on page 9:

“The types of collaboration between employers could, for example, include:

  • Large primes and small businesses in a supply chain developing a mutually beneficial programme of learning
  • Leading employers investing in a sector by providing up-front funding to support learning
  • opportunities in smaller businesses
  • Employers working together, with the support of their employee representative bodies, to secure greater apprenticeship and sustainable job opportunities
  • National Skills Academies working for a set of employers to secure appropriate training opportunities
  • Groups of employers, who individually may find it difficult to meet their skills or training requirements, coming together through bodies such as Group Training Associations and developing a collective proposal that meets all of their needs and offers more opportunities
  • Employers within a locality developing a strategic skills offer through the most appropriate geographical infrastructure (for example partners in a city region) and with support of colleges and providers”

Difficulties for Collaboration on the Ground

The Government’s main problem with encouraging greater employer ownership of training is the lack of appropriate employer development and implementation mechanisms configured for employer-led bids. Sector Skills Councils are themselves in a competitive bidding agenda and some may not survive. The CBI, Institute of Directors, Engineering Employers’ Federation and others are not appropriately configured to articulate local employers’ skills and training needs. Group Training Associations are reduced in number and some have become training providers.

In short, there are not enough obvious local employer structures to articulate skills needs or submit bidding applications for Employer Ownership Pilots.

Employer bidding routes have been suggested, including bids from larger employers on behalf of supply chains, by clusters of companies and by businesses working together to de-risk training. Some of these were available when funded by Regional Development Agencies. Where they still exist, they will be dominated by larger employers. So there is a risk that some bids might seek simply add deadweight or reduce existing funding costs.

Larger employers with strong relationship with large providers, including colleges, have an advantage, especially where they have current programmes which are substantially employer funded. Larger employers are also more likely to have resources for bid submission.

Transparency

The UKCES “Employer Ownership of Skills” policy document of Tuesday 13 December 2011 included references to the need for market transparency. Page 5 ‘Transactions should be transparent’ included:

“Public contributions should be transparent, simple and less bureaucratic. Public contributions should be designed to facilitate employer/employee choice, empowering them as customers to drive quality, innovation and value for money”

This sounds like code language for driving down provider costs.

Initial Bidding Criteria

The Prospectus shows under “Investment Criteria” on page 13:

  • “Economic benefit and value for money – proposals should demonstrate their potential for increasing the impact of work readiness, workforce development and Apprenticeship activity and for this to have a tangible impact on employer performance and growth. Only economic benefits which are deemed to be additional to what would happen without Government support will be counted
  • Innovative approaches to skills and workforce development – proposals should demonstrate how they address strategic skills needs and demonstrate how this solution is new or an improvement on existing options
  • Feasibility – proposals should demonstrate strong employer leadership and set out levels of employer investment alongside public investment. ……… The proposal should show that a strong team with a positive delivery track record will lead the project and that strong and appropriate partnerships have been forged to deliver the solution
  • Quality – proposals should demonstrate how a high quality experience for the employer and learner will be delivered and how the breadth and depth of learning will be provided”.

In bidding jargon, this means that proposals must demonstrate additionality, innovation, a track record and quality assurance.

Size of Bids

None of this should be a surprise. Frequently Asked Questions on the UKCES site says:

“10. Are there minimum and maximum amounts we can bid for?

“We want to see significant and scalable proposals for skills investment and therefore the minimum cash investment from Government will be £250,000 for collaborative proposals involving SMEs, and £1 million for individual or consortia bids involving large employers (defined as employing 250 employees or above). We will continue to assess the appropriateness of the eligibility criteria throughout the Pilot”

13. Over what timescale is the money available?

“Up to £50m is available for the 2012/13 academic year, starting in August 2012. Subject to success of the first round of the pilot, up to £200m will be available for the second round”.

This shows that though the first round of Employer Ownership Pilots will be for a total £50mn, a much bigger second round will be available when there is more bidding experience.

Bidding Timetable

The Prospectus for Employer Ownership of Skills on page 11 shows the bidding timetable:

  • Webinar taking place throughout March and April 2012
  • Full application form and guidance published towards the end of February 2012
  • Deadline for employer registration – 13 April 2012
  • Deadline for submission of full applications 26 – April 2012
  • Decisions and applicant feedback – June/July 2012
  • Delivery to commence August 2012 onwards

Briefing Sessions

The Prospectus for Employer Ownership of Skills on page 11 shows the timetable for Briefing Sessions. Potential Bidders can register online to attend Employer Ownership Briefing Sessions, which are from 0800 till 1000 as follows:

  • Manchester – Tuesday 06 March 2012
  • London – Wednesday 07 March 2012
  • Birmingham – Wednesday 14 March 2012
  • Leeds – Thursday 15 March 2012
  • Sheffield – Wednesday 21 March 2012
  • Bristol – Tuesday 27 March 2012
  • Newcastle – Wednesday 28 March 2012
  • Nottingham – Tuesday 03 April 2012
  • Liverpool – Wednesday 04 April 2012

And, finally. Further Developments

Further developments as they occur will be posted in future Huckfield briefings.