Consultation on the Scottish Government response to the introduction of the UK Apprenticeship Levy

Executive Summary

This report presents the findings of an analysis of responses to a consultation on the Scottish Government response to the introduction of the UK Apprenticeship Levy.

Proposals for an Apprenticeship Levy were announced by the UK Government in the summer 2015 Budget, to apply to the UK as a whole, including Scotland. The levy will begin in April 2017 and employers in the public, private and third sectors will pay 0.5% of their annual pay bill in excess of £3m. Responsibility for disbursal of the levy funding in Scotland will be devolved to the Scottish Government.

In order to explore options for the use of this funding in Scotland, the Scottish Government carried out a consultation between 13 ^th July 2016 and 26 ^th August 2016 to explore respondents' views of:

• Whether the Scottish Government should maintain or increase the current Modern Apprenticeship ( MA) growth ambition ( i.e. 30,000 starts a year by 2020).
• Whether to use the Apprenticeship Levy funding to support growth in the number of Graduate Level Apprenticeships in Scotland.
• Whether to use the Apprenticeship Levy funding to establish a flexible skills fund to support wider workforce development.
• Whether to use the Apprenticeship Levy funding to support the expansion of Foundation Apprenticeships.
• Whether to use the Apprenticeship Levy funding to help unemployed people move into employment and to help meet the workforce development needs of employers.

A total of 374 responses were received. The largest proportion (45%) was from the private sector and their representative bodies. Also common were responses from colleges, universities and the training sector (17%) and individuals (14%). Responses were also received from: third sector and their representative bodies (7%); local authorities and their representative bodies (6%); Government and Non-Departmental Public Bodies ( NDPBs) (5%); NHS (3%) and trades unions ( TUs) (2%).

A large amount of detailed information was provided, and the findings on each of the issues are summarised below. Further details are given in the main report.

Overall findings

The majority of respondents at each question expressed support for the proposals in the consultation document.

At Question 1, in terms of the overall growth ambition, the majority of respondents ^[1] (63%) stated that the Scottish Government's commitment to 30,000 Modern Apprenticeship starts a year by 2020 should be maintained. Just over a quarter (28%) believed it should be increased.

At Question 2, more than three quarters of respondents (79%) stated that Apprenticeship Levy funding should support growth in the number of Graduate Level Apprenticeships in Scotland. Around a sixth (16%) disagreed.

At Question 3, just over three quarters of respondents (79%) stated that Apprenticeship Levy funding should be used to establish a flexible skills fund to support wider workforce development. Just over a sixth (17%) disagreed.

At Question 4, just under three quarters of respondents (65%) stated that Apprenticeship Levy funding should be used to support the expansion of Foundation Apprenticeships. Just over a quarter (27%) disagreed.

At question 5, around two thirds of respondents (66%) stated that Apprenticeship Levy funding should be used to help unemployed people move into employment, and to help meet the workforce development needs of employers. Just over a quarter (28%) disagreed.

Many additional comments were made at each question.

Overall growth ambition - reasons for views

Many respondents provided reasons to support the view (expressed by the majority of those who addressed the question), that the Scottish Government's current level of commitment to 30,000 MA starts a year by 2020 should be maintained.

The main reasons given were that:

• The current level is appropriate and based on evidence of need. It is also ambitious and challenging.
• This is the best way to ensure and maintain the quality of MAs.
• There is a lack of capacity to support an increase in the level of commitment.
• There are some current concerns about MAs ( e.g. lack of flexibility; restrictions on what can be funded).
• Some current issues in the wider context (the overall economy, the introduction of the Levy; and demographic issues) make an increase inappropriate.

Several respondents however, stated that the current level of commitment should be seen as a minimum, and should not be decreased.

Fewer respondents provided reasons to support an increase in the level of commitment (with 28% in favour of this) but reasons given were that this would:

• Help to meet the needs of employers.
• Address gaps in current provision.
• Benefit the wider economy.
• Make use of the availability of Levy funding.

Many additional suggestions were made about how to develop apprenticeships. These are summarised along with suggestions from other questions later.

Proposed uses of Apprenticeship Levy funding - reasons for views

A clear majority of respondents in each case were in favour of the uses of Apprenticeship Levy funding to:

• Support the growth in the number of Graduate Level Apprenticeships in Scotland.
• Establish a flexible skills fund to support wider workforce development.
• Support the expansion of Foundation Apprenticeships.
• Help unemployed people move into employment.

Many respondents made additional comments giving reasons for their views about each of these proposals, and there were a number of recurrent cross-cutting themes.

Benefits of the proposals

Many of the comments focused on the benefits of the proposals (reflecting the overall pattern of views). Common themes were that these uses of Apprenticeship Levy funding would help to:

• Meet the needs of employers.
• Meet the needs of specific sectors, or for specific skills.
• Meet the needs of the Scottish economy.
• Meet the needs of individuals.
• Promote equality and diversity and address the needs of specific groups.
• Address gaps in, or limitations to current provision.
• Support the overall policy approach.

While the specific nature and relative emphasis of these benefits varied by individual question, and a large amount of additional detail was provided, these were the main reasons given for supporting each of the proposed uses of Apprenticeship Levy funding.

Concerns about the proposals

A smaller number of respondents at each question identified concerns about the proposed uses of funding. Again, there were a number of common recurrent themes.

Concerns about the proposals focused on views that:

• There is a lack of demand for, or benefit from the proposed use of funding.
• The proposals represent an inappropriate use of Apprenticeship Levy funding.
• They may divert funding from the main priority.
• They should be funded in other ways.
• The proposals may have a negative impact on wider issues, such as other opportunities for learning, training, skills development and employment.

Suggested developments

Many suggestions about developments to learning, training, skills development and employment were made, at the specific questions, and at Question 6 (which asked respondents to identify any other potential uses of Apprenticeship Levy funding).

Again, while there many specific, detailed suggestions, there were also a number of common themes. These are summarised below.

The overall approach to the use of Apprenticeship Levy funding

One group of suggestions related to the overall approach to, or principles for the use of Levy funding. Common issues raised were the need for:

• Quality.
• A flexible approach.
• An approach which is based on the needs and demands of employers, sectors and the Scottish economy.
• Joint working, collaboration and partnership with employers and between stakeholders.
• Coherence with systems in other parts of the UK.
• Fairness, equality and social justice.
• Consistency with wider policy.
• A coherent overall approach and clear pathways.
• Simplicity, effectiveness and value for money.

These suggested elements of the approach, or overall principles recurred frequently throughout the analysis.

Specific developments and suggestions

A further group of suggestions related to specific developments in each of the types of provision examined ( e.g. MAs, GLAs, wider workforce development, FAs and work to improve access to employment).

Many suggestions were made about using the funding to support:

• Practical costs of learning, training, skills development and employment.
• Standards.
• Certification and qualifications.
• Specific forms of training.
• Training delivery.
• Awareness raising and promotion.
• Strategy and infrastructure for learning and training.
• Research and innovation.

While the specific suggestions varied at each question, these were recurrent themes throughout.

Developments in specific sectors / subject areas

Comments were also made at each question about how specific sectors might benefit from the types of development suggested.

The sectors mentioned varied by question and proposal, but some were mentioned frequently for further developments (although by small numbers in each case). These were:

• Engineering and construction.
• Health and social care.
• Energy.
• Transport.
• Retail.
• Food and drink.
• Creative.
• Hospitality and tourism.
• Public sector (particularly local authorities).
• Science and technology (including digital / IT).
• The third sector (and individuals and communities supported by third sector organisations).

Many other sectors were also highlighted, as was the need to support developments across a wide range of sectors and types of employer (including SMEs).

Some specific roles within the sectors, as well as subject areas or skills, were also highlighted. While many were mentioned, these included:

• Management and leadership skills.
• Human resource skills.
• Financial skills.
• STEM skills (including IT and digital skills).
• Coaching and mentoring.
• Life skills, "soft" skills and work-readiness.
• Practical and functional skills.
• Equality and diversity awareness.
• A variety of organisation-specific skills.

Many detailed comments were made about the specific needs of particular sectors.

Developments for specific groups

Many respondents made suggestions about the use of funding to promote equality, and to reduce inequalities, both generally and for specific groups.

The groups mentioned included:

• Older people (mentioned most frequently).
• Women.
• Disabled people (including people with learning difficulties).
• BME people.
• Young carers.
• Care experienced young people.
• People in rural areas.
• People in deprived areas / experiencing poverty.
• Non-academic people, or those facing barriers to traditional pathways.
• People unemployed for a long period; facing redundancy; or returning to work.
• Low-paid workers; those working in "non-traditional" ways; and volunteers.
• People from "chaotic" backgrounds.

Comments were also made on the need for opportunities for other disadvantaged and excluded groups.

Types of funding arrangements

In addition to all of the specific developments suggested, many respondents made additional comments on funding arrangements for using the Apprenticeship Levy.

The main issues raised were the need to ensure that:

• Levy-paying employers (and their sectors) benefit from the funding.
• Funding is available to employers not paying the Levy ( e.g. employers in a "supply chain"; those addressing the needs of a particular sector; and SMEs in general).
• There is flexibility for employers to use the funding in the way most relevant to their business or sectoral needs ( e.g. with ring-fenced or direct access to funding).
• Provision is made to address the needs of particular under-represented groups, tackle current gaps and inequalities, and recognise higher provision costs.
• Apprenticeship Levy Funding is not used to replace current funding, and other developments proposed in the consultation document are not implemented at the expense of the main priorities.

Other issues raised

Many respondents made other comments relating to the following broad themes:

• Current issues and concerns (particularly the impact of the Apprenticeship Levy).
• Additional implementation suggestions for the Apprenticeship Levy.
• Comments on the consultation.
• Provision of additional (often detailed) Information about the respondent.

All of the consultation findings, and the detailed material within the full report and the individual responses, will help to inform the Scottish Government's consideration of the way forward for the use of Apprenticeship Levy funding in Scotland.

All of the findings are presented in detail in the main report, with the full responses available on the Scottish Government website ^[2] .