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

4. Flexible Skills Fund

4.1. This section presents the findings relating to Question 3, which asked:

"Should Apprenticeship Levy funding be used to establish a flexible skills fund to support wider workforce development? a) Yes b) No"

Overall pattern of views

4.2. Nearly all of the respondents (96%) addressed Question 3. Of these, just over three quarters (79%) either ticked "yes" or expressed clear support for the view that Apprenticeship Levy funding should be used to establish a flexible skills fund to support wider workforce development.

4.3. Just over a sixth (17%) either ticked "no" or expressed clear disagreement with the use of Levy funding for this purpose. The remainder of those who addressed the question (4%) did not express a clear preference, but made other comments.

4.4. By respondent type, there was strong support for the establishment of a flexible skills fund among organisational respondents, regardless of category. Individual respondents were split, with 58% who favoured the establishment of a fund, and 42% who did not.

4.5. There was little difference at Question 3 by respondents' overall view of the growth ambition for MAs. 78% of those who stated that the Government's current commitment should be maintained, compared with 75% of those who believed it should be increased, expressed agreement.

4.6. The full quantitative analysis of Question 3 is presented in tables A8 to A11 ( Annex 3).

Additional comments

4.7. More than four fifths of those who responded to Question 3 (85%) made additional comments. There were three main themes overall:

• The benefits of, or reasons to use Levy funding to establish a flexible skills fund.
• Concerns about using Levy funding to establish a flexible skills fund.
• Suggestions about the development of a flexible skills fund.

4.8. Many issues were raised within these themes, and these are summarised below.

Benefits of, or reasons to use Levy funding to establish a flexible skills fund

4.9. Over two thirds of those who made additional comments suggested benefits of, or reasons for this. These related to the following broad areas:

• Meeting the needs of employers and the Scottish economy.
• Meeting the needs of specific sectors.
• Meeting the needs of individual workers.
• Promoting equality.
• Addressing current gaps in, and limitations to provision.

Meeting the needs of employers and the Scottish economy

4.10. The most common perceived benefit of using Levy funding to establish a flexible skills fund was that this would help to meet the needs of employers. Several respondents stated, for example, that this would address the needs of Levy payers (in all sectors) who may not be able (or wish) to offer sufficient apprenticeships, enabling them to use the fund to meet other training needs, and to recover, and benefit from, their Levy costs.

4.11. Several respondents mentioned the general value of this type of fund, or cited evidence of need or demand from their own sector (or more generally). Another comment made frequently was that MAs are not always the most appropriate (nor only) training route for some sectors or employers, and a flexible skills fund would allow them to seek the best solution(s) for their own staff, and develop the skills most relevant to them.

4.12. A further perceived benefit to employers and the Scottish economy was that a flexible skills fund would help to develop a workforce to meet future needs, as it would help: fill current skills gaps; and support recruitment, retention, progression and succession planning.

4.13. It was also suggested that it would help promote overall economic growth, as it would: support innovation; sustain key industries; enable adjustment to changing circumstances; and improve productivity, effectiveness and competition.

Meeting the needs of specific sectors

4.14. Closely related to the benefits to employers, many respondents stated that a flexible skills fund would help meet the needs of specific sectors. Those mentioned most frequently (each by a small number) were digital/ IT; health and social care; construction; the third sector; oil, gas and energy; and retail. A number of others were highlighted.

4.15. Some respondents gave examples of challenges they faced as an organisation or employer (such as, for example, an ageing workforce and changing requirements for the future). Some identified particular skills gaps, and how a flexible skills fund could help address them (although not all respondents in each sector expressed such views).

Meeting the needs of individual workers

4.16. A further benefit of using Levy funding to establish a flexible skills fund, identified by many respondents, was that this would help to address individual workers' needs. Comments made frequently were that it would enhance their learning and skills, and improve their career development opportunities. It was also seen to provide learning and training options for those for whom an apprenticeship may not be the best option.

4.17. Other benefits of such a fund for individuals were that would: enable upskilling and expansion of their roles; enable retraining; and promote continuing professional development ( CPD). It was also suggested that it would increase their employability, improve their earning capacity and enhance their job satisfaction.

4.18. More widely, it was suggested that it would increase workforce and social mobility and encourage flexible working, again benefitting individual workers.

Promoting equality

4.19. Many respondents stated that a flexible skills fund would help promote equality (generally and for particular groups). It was suggested, for example, that this could help to: provide opportunities for the whole workforce; remove barriers to learning and progression; promote inclusion; reduce discrimination. One respondent stated it would help promote parity of esteem between vocational skills and academic qualifications. Another suggested that it would help address in-work poverty.

4.20. A number of specific groups were mentioned as benefitting from a flexible skills fund. The group mentioned most often was older workers, and respondents mentioned a range of training needs among them. These, coupled with demographic changes and current gaps in funding for over-25's were mentioned as reasons to support the need for a flexible skills fund.

4.21. Other groups mentioned (by small numbers in each case) which could benefit from the establishment of such a fund included: disabled people; women (or men) experiencing occupational segregation or other barriers; BME people; looked after young people; returners to work; people in rural areas or areas of economic downturn; and people who have been unemployed for a long period.

4.22. Some respondents made reference to additional groups which may experience barriers to training ( e.g. self-employed people; freelance workers; part-time, casual or seasonal workers; those on zero hours contracts; agency workers; and volunteers) who may also benefit.

Addressing current gaps in, and limitations to, provision

4.23. Several respondents cited current gaps in, and limitations to provision as a reason to support establishing a flexible skills fund. The issue raised most commonly was the current cost of training to employers (particularly SMEs). One respondent also mentioned that there could be a reluctance to train staff who may move on quickly.

4.24. A few respondents stated that the Levy may lead to a decrease in employers' spending on wider training. Some also cited gaps in, or reductions to current funding for wider training. It was suggested that a flexible skills fund could help address these issues.

Concerns about using Levy funding to establish a flexible skills fund

4.25. A smaller proportion of those who made additional comments (under a sixth) expressed concerns about using Levy funding for a flexible skills fund. These related to:

• Issues with the use of funding.
• Lack of need for, or benefit from a flexible skills fund.
• Wider negative impacts.

Issues with the use of funding

4.26. The main issue with this use of Levy funding was a view that it should only be used for apprenticeships (or, in the view of some respondents, for directly related provision). A number of additional comments were made, including that:

• Funding is limited, with a need for more apprenticeship funding. This would deplete this or, detract from the primary purpose.
• The focus should be on young people or particular industries.
• The UK apprenticeship growth model should be supported.

4.27. A few respondents stated that wider workforce development should be funded in other ways ( e.g. by employers; sectoral initiatives; or Scottish Government / Skills Development Scotland [ SDS] funds). A small number suggested that the training required could be integrated into the apprenticeship frameworks.

Lack of need for, or benefit from a flexible skills fund

4.28. A few respondents stated that there was no need for a flexible skills fund. Comments (by small numbers in each case) included that: wider training is already funded ( e.g. by companies or an existing levy); and this would not address the key priorities for MAs.

4.29. A small number of other concerns were raised about the impact of such a fund. A few respondents questioned how it might be used or prioritised, or suggested that it may not deliver value. It was also suggested that the Levy itself would require significant change, and that the opportunities to implement a flexible skills fund may be limited.

Wider negative impact

4.30. A few respondents expressed concerns about a wider negative impact, including that such a fund may: reduce the incentive for apprenticeships; replace existing funding; or undermine the role of an existing industry training levy.

Suggestions about the development of a flexible skills fund

4.31. Around two thirds of those who made additional comments at Question 3 made suggestions about developments. The most common related to:

• The overall approach to a flexible skills fund.
• The overall purpose and potential uses of a fund.
• Developments for specific sectors or subject areas.
• Promotion of equality and meeting the needs of specific groups.
• Implementation suggestions.
• Funding arrangements.

The overall approach to a flexible skills fund

4.32. The largest number of suggestions about a flexible skills fund related to the overall approach to such a fund. A common issue note was that funded activities should be integrated with current provision.

4.33. A further issue raised frequently was the need for quality assurance, and the view that there should be standards, outcomes and monitoring arrangements. Several respondents argued that any training should be approved, and lead to qualification or other accreditation. A few mentioned that a Scottish Credit and Qualifications Framework ( SCQF) benchmark should be used (although a small number disagreed with this, or with the potential use of Level 6 and above, as mentioned in the consultation paper).

4.34. Another common suggestion was that the fund should be based on employer needs, demand and priorities. Some respondents also stated that employers, industry and their representative bodies / organisations should be involved in the development of the fund, with a joined-up, partnership approach.

4.35. A related view was that the use of the fund should be aligned to skills shortages, and area needs ( e.g. informed by Regional Skills Assessments and Skills Investment Plans). A small number mentioned that a fund should also meet client demand.

4.36. Several respondents stated that the fund should be flexible, in order to allow employers to: recover training costs; target different workforce needs and shape training to suit their needs. It was also suggested that this would enable support for regional skills priorities and different forms of learning. Several respondents stated that the fund should cover a wide range of training, and should not be too narrowly focused.

The overall purpose and potential uses of a fund

4.37. Many respondents commented on the overall purpose and uses of a flexible skills fund. Overall suggestions included that it could be used to promote: general workforce skills development; personal and career development; upskilling, cross- and re-skilling; work readiness; return to work; redundancy avoidance; equality and diversity.

4.38. A small number of respondents stated that the Apprenticeship Levy should be seen as, and renamed a "Skills Levy" or "Training Levy", accessible to the wider workforce.

4.39. Several specific uses of a flexible skills fund were identified (by small numbers in each case). These included that such a fund could be used to support:

• Internal and external courses and work-based learning.
• Employer input to the design and development of vocational training.
• Identification of learning needs, workforce planning and job re-design.
• In-work support ( e.g. supported employment and post-apprenticeship input).
• In-fill learning and training costs.
• Skills competitions and "talent bootcamps".
• Sharing of facilities, research findings and resources.
• Promotion and signposting of opportunities.

Developments for specific sectors or subject areas

4.40. Several respondents (although small numbers in each case) mentioned specific sectors for support, or developments that could be supported in their own sector. Some suggested that there should be opportunities in all sectors.

4.41. A few respondents mentioned a specific need to support SMEs. A few third sector respondents suggested that the fund could be used to provide training and support for staff who manage volunteers and for those in social enterprises, as well as for volunteer development, training and expenses.

4.42. A small number of respondents suggested specific types of skills that could be developed using the fund, or particular subject matter for training ( e.g. "soft" skills; leadership and management skills; human resource skills; financial skills; and equality and diversity training). It was also suggested that the fund could support training for trainers, mentors and coaches, as well as for on-the-job training personnel.

Promotion of equality and meeting the needs of specific groups

4.43. Another common suggestion was that the fund should be used to promote equality, and to address the needs of specific groups. It was suggested that it could be used to develop opportunities and assist integration to the workforce for excluded or disadvantaged groups.

4.44. The most common suggestions related to using the fund to support workforce development for older workers. Other groups suggested for targeting or prioritisation, mentioned by smaller numbers, included those highlighted at paras 4.20-4.22.

Other suggested developments

4.45. A small number of other actions relating to a flexible skills fund were suggested (by a few respondents in each case). These included:

• The use of workforce development plans.
• Development of a UK-wide Government employment and skills strategy.
• Identification of clear funding criteria.
• Improved alignment and co-ordination across the UK.
• Cross-border flexibility.
• Mapping and review of sectoral needs and skill shortages annually.
• Consideration of lessons from the previous Flexible Training Opportunities Fund.

Funding arrangements

4.46. Many comments were made on funding arrangements. The most common related to the need to ensure that a flexible skills fund provides benefits to Levy payers, with suggestions that:

• Some or all of the fund should be confined to Levy payers (and, in the view of some, their supply and distribution chains).
• Levy payers' sectors should benefit directly from the fund.
• Levy payers should have first call on the fund, and easy / direct access to this.
• Levy payers or sectors should be able to distribute their own allocation of the fund.

4.47. A few respondents suggested making funding available to those working with the specific groups mentioned, or promoting the types of activities highlighted.

4.48. Several respondents stated that a flexible skills fund should not reduce or replace existing sources of funding, but should increase investment and add value. A few made suggestions about activities that should not, in their view be funded ( e.g. local goods and services; administration; salary or expenses costs; or company-specific training).

4.49. Additional suggestions, made by small numbers of respondents, included that funding should be: capped; strictly controlled; transparent; and non-bureaucratic. A few stated that funding could be ring-fenced for, for example: "biddable" projects; grants; or individual skills account funding for young people. It was also suggested that this funding could be used in conjunction with existing funding.

4.50. One respondent expressed the view that there should be a mixture of sectorally-based and cross-sectoral funds, rather than one large "pot", while another stated that there should be a single fund. A small number of respondents suggested that existing practice could offer potential insight or models.

Other comments

4.51. Several respondents (with differing overall views) raised questions about particular aspects of the flexible skills fund, or mentioned a need for further clarification or definition.

4.52. A few made comments on the Levy itself, and some highlighted their own potential role in taking proposals for a flexible skills fund forward. These issues are discussed at Question 6.