Flexible Workforce Development Fund (FWDF): evaluation

5. Stakeholder Feedback

Summary

Stakeholders taking part in this evaluation were largely positive about the Flexible Workforce Development Fund (FWDF).

It is considered by stakeholders to be a much needed and valued intervention. There is said to be a clear, strong, and continuing rationale for the FWDF and the role it could play in further supporting inclusive economic growth and COVID-19 recovery.

There is a strong and unanimous view among stakeholders that the Fund should continue (in some format) as it is one of only a few that target support at employers and workforce development opportunities for all age groups. Some of the challenges encountered in Year 1 of the Fund have been overcome, as momentum and awareness were further built in Year 2 and Year 3.

While there have been challenges in Year 4 delivery, such as COVID-19 impact and the administrative burden associated with non-Levy-payer Small and Medium Enterprises (SMEs), the changes made in Year 4 are mainly seen by stakeholders as positive and "listening" to stakeholders and industry. Stakeholders participating in this evaluation noted that this will be important going forward.

The FWDF is considered by stakeholders to be performing well on a number of levels. It is generally considered to benefit all stakeholder groups engaging in this evaluation – employers, employees, and training providers. There are, however, some contrasting views in that independent training providers report that they have had limited involvement and benefit.

Greater flexibility in how the Fund operates is broadly supported by all stakeholder groups.

Where there are mixed views among stakeholders, this centres on three aspects:

1. the funding cap for Levy-payer employers. Some, but not all stakeholders, think it could be higher;

2. independent training providers feel that their involvement has been constrained, and that employers should have more choice in training provider. This feedback needs to be viewed in the context that an objective of the Fund is to strengthen college-industry engagement; and

3. the extent to which college provision is tailored to employer needs.

Stakeholders consulted noted that the FWDF has not been without its challenges. This includes: scale and capacity of training providers; marketing, promotion and awareness of the Fund; reporting; annual funding cycle; milestones for FWDF delivery; and geography.

Introduction

45 organisations (60 individuals) (Table 5.1) were consulted in the evaluation via telephone or video conference between January 2022 and March 2022.

Table 5.1: Summary of organisations and individuals consulted in the evaluation

	Number of organisations	Number of individuals
Delivery Partners (Scottish Government, Scottish Funding Council, Skills Development Scotland)	3	9
Training Providers – Colleges and Related Boards	27	33
Training Providers – Non-College Provision	6	8
Wider Stakeholders engaging with the FWDF	9	10

A valued intervention

The FWDF is considered to be a much needed and valued intervention across all stakeholder groups taking part in this evaluation. There is broad recognition of the importance of providing increased opportunities for the upskilling and reskilling of the existing workforce. Stakeholders reported a clear, strong, and continuing rationale for the FWDF and the role it could play in further supporting inclusive economic growth and COVID-19 recovery. Investing in the workforce is viewed as a critical component to achieving this.

The Fund is considered to have plugged a gap in provision and is operating in what stakeholders perceive to be a clear space within the wider skills ecosystem. The strong focus on the employer/business and the provision of upskilling and reskilling opportunities for all age groups within an employer's current workforce are identified as key strengths of the intervention. It is noted that much of the wider skills provision is aimed either at the individual and/or at specific target groups (e.g. young people).

There is a unanimous view among stakeholders participating in this evaluation that the Fund should continue (in some format). It is perhaps worth highlighting that there is an element of "self-interest" from stakeholders who could primarily see their responses framed by the type of organisation e.g. college or businesses.

An established fund for Levy-payers

Year 1

Training providers with direct experience of the first year of the FWDF (i.e. colleges) highlight the lack of sufficient lead-in time or development resources prior to the formal launch of the Fund in 2017/18.

The main feedback is that it took time for awareness of the FWDF to be built and for processes and systems to be put in place by the college sector to support delivery.

Key challenges at this early stage in the Fund are commonly framed by stakeholders as the lack of funding for a national marketing and promotional campaign and no readily available access to a list of Levy-payer employers.

The general sense from college sector stakeholders is that it took time in Year 1 for their teams and for employers to understand the purpose of the FWDF and what it aimed to do, to achieve momentum in raising awareness of the Fund, and for colleges to identify and establish relationships with Levy Paying employers. Considerable time and effort have gone into firmly establishing the FWDF and to broker new relationships and connections with Levy-payer employers. This has been mirrored in the development of the private provider route in Year 4 of FWDF and noted by Skills Devleopment Scotland (SDS).

Year 2 and Year 3

The main feedback from the college sector, delivery partners and wider stakeholders is that strong foundations had been laid by the college sector in Year 1, and that moving into Year 2 and Year 3 of the FWDF, delivery was easier and smoother for much of the college sector. In support of this, there is wider acknowledgement among stakeholders that:

• Processes are now established and the FWDF has become an integral and embedded part of the wider college commercial offering.
• There has been repeat custom from some Levy-payer employers.
• The increased funding cap in Year 2 for Levy-payers was welcomed.

Impact of Year 4 changes

Stakeholders emphasise that it is important to bear in mind that:

• Overall performance of Year 4 should be set in the context of COVID-19.
• Implementation of the Year 4 changes are still in their early stages, and have not had sufficient opportunity to bed in.

The increased FWDF pot from £10 million to £20 million in Year 4 was welcomed. It is reported that this has enabled more employers to be supported and provided additional support in direct response to the impact of the pandemic.

SMEs

Common feedback among all stakeholder groups consulted in this evaluation is that opening the FWDF to SMEs in Year 4 was the right and sensible thing to do, and that it was a "game changer" – not least because:

• SMEs play a major role in the Scottish economy and account for the vast majority of the business base (Businesses in Scotland: 2021).
• SMEs can often face a range of barriers to workforce development, and access to the FWDF has helped to overcome these challenges.
• The available funding while perhaps less than generous to large companies is seen as an appropriate level for SMEs.
• The number of Levy-payers in some parts of the country is relatively small, and micro businesses and SMEs play a vital role in remote/rural geographies.

Some training providers note that demand for FWDF support from SMEs has been strong, and that their allocation could have been filled multiple times over. Others commented that it has felt like "Year 1 of the FWDF again" – with an ongoing need to devote resources to build awareness of the Fund among SMEs.

Non-college provision

Expanding training provision through the FWDF beyond the college sector is also broadly welcomed by all stakeholder groups in this evaluation, albeit there are said to have been various issues that have affected (or constrained) its effective implementation. The main message from the college sector is that the expansion of provision to include non-college provision has not had much, if any, impact on their institution's own FWDF delivery. Many college sector participants noted, however, that it has helped them as it has been another referral source.

Stakeholders report that there are likely to be several factors at play:

• The non-college provision route into the FWDF is still in its relative infancy.
• The college sector makes use of "associate tutors" (often independent training providers who bring current industry practice into the delivery and help to provide current and up to date curriculum content) and other colleges in Scotland to provide additional capacity for delivery, including but not limited to areas where they do not have in-house expertise or provision available. This practice is not limited to the FWDF and is a common practice within the college sector.
• Linked to the point above regarding "associate tutors", independent training providers feel constrained in their ability to proactively market and promote their training products/offer in a FWDF context. In part such marketing activity is considered to put them in a "direct conflict of interest with the college sector" – who some rely on as an important source of income.
• All training delivered through the college route is "badged" as on behalf of a particular college and not their own company.

Further, viewpoints expressed by some independent training providers are that:

• The FWDF has created a business-led model for independent training providers – there is not believed to be a "level playing field" between college and the non-college provision.
• There are inconsistent day rates applied by the college sector for use of "associate tutors".
• The criteria for Levy-payers to use independent training providers for "specialist training" is considered a grey area.

Wider feedback is that Levy-payer employers are required to choose one route into the FWDF (as noted earlier, with the college the default position, unless the college cannot provide the training or specialist training is identified). There is some feedback that the "easy choice" for Levy-payer employers would be to go with a college rather than an independent training provider via the Skills Devleopment Scotland (SDS) route:

• Colleges have had four years to establish long-standing relationships with Levy-payer employers. Independent training providers feel "behind the curve".
• Colleges support employers through the application process which is helpful for businesses. Through the SDS route to the FWDF employers deal with the application process and traning needs analysis themselves and also source the independent training provider.

A wider point raised by some training providers (including but not limited to independent training providers) and wider stakeholders relates to the different routes into the Fund and that this is "limiting the choice of employers to use more than one training provider" should they wish to do so. This is because the routes into the FWDF currently operate as discrete strands and funding pots.

A common example provided through the consultations, undertaken as part of this project, is that of a Levy-payer employer that engages with a college and has agreed an initial plan worth £10,000 of training provision. Within the current Fund parameters the Levy-paying employer could then not also engage The Open University in Scotland (OUiS) and/or an independent training provider for the remaining £5,000 of funding available for additional training. In these circumstances the likelihood is that the Levy-payer employer will simply "top up" the training with the college to ensure the £15,000 annual cap is used in full. Some stakeholders question whether this is the most effective and impactful use of the Funds from an employers' perspective (and from an additionality perspective).

Note: There is an agreed workaround for this issue via the SDS delivery route, however, it was raised by a number of training providers, which suggests that further communication is required.

A related point is that independent training providers are not able to engage with SMEs, and conversely the OUiS is not currently able to engage with Levy-payers.

Greater flexibility in how the Fund operates is therefore broadly supported by all stakeholder groups in this evaluation.

Funding cap model

Mixed views are provided by stakeholders on the funding cap for Levy-payers.

There is recognition of the tension that exists between supporting more employers with smaller amounts of funding and supporting fewer employers with larger amounts.

The £15,000 funding cap was felt by stakeholders to be too small for some Levy-payers' needs:

• "A drop in the ocean" compared to what they pay into the Apprenticeship Levy.
• Some believe it is "their tax monies" which they should get back.
• Some believe that their industries are "subsidising" others.

While some Levy-payers have not accessed the FWDF due to the maximum funding available, some note that it can cause "bun fights" within different parts of the same organisation who often compete to get their application in first.

There is some, but not universal support for a "tiered", "pro-rata" or "staggered" funding model to help overcome this issue, with the thinking that this could make the FWDF more attractive to more Levy-payer employers. Others suggest more flexibility or "discretion" could be applied in some contexts, and in particular where the impact of the workforce development activity would be significant for an employer. On the flip side, it is reported that such an approach could create added confusion for employers.

SMEs

The main consensus is that the £5,000 annual funding cap for SMEs is appropriate. Much of the feedback from training providers highlights applications for funding are typically much lower than £5,000. In part, this might reflect the size of SME employers currently engaging in the Fund (at the micro and smaller end). This is supported by our analysis of the awards made (Section 3).

The general message is that SMEs have been very grateful for the funding, that it has been "a lifeline", and that the FWDF monies "can go a long way". There is, however, broad acknowledgement that the definition of an SME spans one to 249 employees, and that at the higher end of the spectrum £5,000 may not be as appropriate as it is for a micro or small employer. Stakeholders note that most SMEs who are at the higher end based on number of employees are probably also Levy-payers and therefore can access the £15,000 allocation instead.

Further, stakeholders added that it would be important to capture and listen to the feedback directly from Levy-payer and SME employers regarding the funding cap in terms of informing future delivery.

Application process and training

Key points to note from the stakeholder consultations on the application process, training needs analysis and training delivered via the FWDF include the following:

• Some hold the view that the application process could be streamlined, in particular for SMEs to ensure it is accessible and proportionate. Wider feedback highlights that Levy-payers are required to provide repeat information in parts of the application from year to year.
• The colleges/OUiS support applicants through the process, provide examples of what narrative they might expect to see in response to the question set, and/or help complete the form. The training providers have established good working relationships with employers. However, the time involved in providing such support is reported by some training providers to be an administrative burden.
• Enrolling participants on courses can be onerous, in particular where an employer sends many people on a course(s) and/or when many short courses have been selected.
• Training needs analysis by the college sector/OUiS largely continues to be undertaken on a relatively informal basis with employers. Some stakeholders believe that a robust training needs analysis should be completed, while others believe this would be overkill. The business community subscribe to the latter point of view.

Over the first few years of the FWDF, training such as Leadership and Management and Health and Safety have been in greatest demand from employers. Training needs have changed because of COVID-19 – there has been increased demand from employers for training such as Managing Remote Teams, Mental Health First Aid, Health and Wellbeing at Work, Change Management, and Digital.

There remain some views that the colleges are still trying to "sell" off the shelf products or show employers a "prospectus" of existing training provision (for most it is not meant to be viewed as a comprehensive list) rather than bespoke offerings, albeit it is recognised the cost to develop a bespoke offering may be high compared to the risk of a low level of demand. It has only been in Year 5, that 5% of the funding allocation for each college/OUiS can be used for the development of brand new training provision. Development funding needs sufficient lead-in time and for it to be appropriately resourced internally (e.g. lecturers' time away from teaching). A few colleges mentioned they are engaging with employers around how development funding could be best utilised.

While there is still a clear view around the need to (in some way) accredit the training, there is an alternative view that many SMEs just need a few hours of support to address a specific skills issue. The Fund allows for both.

Impact of COVID-19

There is clear and strong feedback from all stakeholder groups on the impact that COVID-19 has had on the both the supply and demand sides of the FWDF.

On the supply side, training providers had to pivot much of their provision online - quickly extending and mobilising digital platforms for staff and students alike. For many, this was a steep learning curve and involved considerable time and effort from a design and administrative perspective.

The rapid and widespread shift to digital provision has created both challenges and opportunities, reported as follows:

• Challenges – varying levels of digital literacy and skills among participants in training; initial hesitance among some employers for remote learning; some provision requires a face-to-face component; and potential for more disruption for the learner if participating in remote training while physically in the workplace.
• Opportunities – ability to achieve broader reach and engagement in workforce development; helps with training to support effective remote working; supporting employers with a dispersed workforce; shorter blocks of training and bite sized learning; saves time and cost in travelling to deliver/attend training; and can be a more cost effective mode of delivery.

The reality was that many of the courses were delayed or cancelled, due to the training establishments being in lockdown and most of those delivering the training were furloughed.

Wider feedback centres on a hybrid model of delivery going forward, with mode of delivery, however, driven by the needs and preference of the employer. Many training providers highlight that employers are certainly more open to remote learning. Both of these points are further supported through our employer survey.

Employer engagement was made more challenging over the last two years, with some colleges reporting less marketing and promotion than would normally have been the case, and clearly much less in-person engagement. Staff changes within employers has also meant that some key contacts for training providers were lost.

Extensions to Year 3 and Year 4 have resulted in the overlapping of FWDF delivery. While the rationale for this is understood (and requested by colleges), it resulted in planning and logistical challenges for training providers. For example, dealing with the backlog of training to be delivered due to postponements while at the same time building the pipeline for the next academic year of the Fund. Further, it is noted that employers often find it difficult to commit to further training when they still have a balance of workforce development training outstanding.

The impacts of COVID-19 are still being felt, although the general consensus is that any decline in demand due to the pandemic (or slow uptake of the new SDS route) is likely to be temporary. Some colleges highlighted that demand may be reaching saturation point with regards to Levy-payers.

On the demand side, the main challenge as reported by stakeholders is a shift from growth to survival mode for many employers, with workforce development pushed lower down the list of company priorities.

However, stakeholders note that the position has changed significantly over recent times - as people become scarcer and the labour market tightens, workforce development is likely to become critical to upskill internal people into roles.

Benefits and impacts

The FWDF is clearly seen (by many stakeholders in this evaluation) as being of advantage and benefit to the employer, individuals, and training providers. However, independent training providers feel that they may have not benefitted to any great extent to date, with wider feedback that "restricted choice on training provider" depending on route into the FWDF may also limit benefits realised by employers (and employees).

For the college sector/OUiS the key benefits for their institutions from involvement in the FWDF are, however, commonly framed as follows:

• Greater engagement with employers, including among those who might not traditionally have engaged with the institutions previously.
• A shift from transactional to longer-term industry engagement.
• Closer to industry and increased understanding of employer needs/issues.

The FWDF is seen as important in enhancing their employer engagement activities, adding to their toolbox and giving them something to talk to employers about.

For employers, the college sector/OUiS reported that it has resulted in:

• Greater knowledge and awareness of the training provider offer.
• Increased engagement with training providers.
• Increased levels of workforce development.
• Skills that the business needs.
• For employees the main benefit is said to be increased skill levels.

Additionality

The general consensus is that FWDF training is additional and that employers otherwise would not undertake workforce development or train additional numbers of staff. It is strongly felt to have stimulated demand for workforce development, albeit as this evaluation found, formal evidence may be lacking.

A few wider stakeholders, however, commented further on additionality:

• As the Fund operates on a "first come first served" basis, this may limit any due diligence assessment of additionality prior to award.
• Some Levy-paying employers have received four years of funding from the FWDF – the point raised is whether these employers should pay for this training themselves or make a contribution towards the cost of FWDF training.
• A perception is that there may "less incentive" for the college sector to engage with lots of new clients given the "guaranteed pipeline" from repeat Levy-payer employer custom (the data review shows that there is strong repeat business).

Wider challenges

Scale and capacity of the college sector/OUiS

The college sector and OUiS vary in terms of scale, resources and capacity. Some point to having a very small or no Business Development or Engagement Teams. This presents capacity constraints:

• To proactively promote the Fund.
• For employer engagement activity.
• For administrative activities.
• To deliver training that is not "off-the-shelf" and which requires extensive development resource.

The college sector does not receive an allocation to support the administrative costs of managing, delivering and monitoring the FWDF. Many college participants report that the administrative burden has increased since the Year 4 changes (i.e. non-Levy-payer SMEs). Here, there is wider reference that:

• SMEs often have no internal HR or Learning and Development Team and require additional support through the process.
• The lower funding cap means that there are more employers to support, arrange training for, etc.
• There has been greater follow-up activity required of training providers. The key contact in an SME typically wears "multiple hats" and it has been time consuming from initial engagement stage to the training commencing.

Promotion

Many stakeholders in this evaluation believe the FWDF still needs to be more strongly promoted to ensure that it is fully understood by potential applicants, in particular to reach SMEs, employers new to the Fund, and those who have not accessed it for some time. There is also strongly felt to be a role for all key partners and stakeholders in the FWDF to proactively market and promote the FWDF.

The lack of funding for a national marketing campaign was raised in the pilot year evaluation and again through this most recent evaluation. Some commented that increased marketing, in particular at a national level, may stimulate demand beyond that for which funding is available (as well as further stretch available resources within training providers).

Marketing and communications is an ongoing activity for the college sector/OUiS – and is done on varying levels depending on capacity. The college sector does not receive an allocation to support marketing and promotion of the Fund. Many continue to work with and through others to help raise awareness. A mix of approaches continues to work well. Wider feedback includes whether there is scope for HMRC to help publicise the FWDF and/or provide a list of Levy-payer employers. Independent training providers also feel particularly constrained in their ability to promote the Fund.

Reporting

Some training providers view reporting as onerous and disproportionate.

Annual funding cycle

Certainty of funding and sufficient lead-in time are considered essential for employer engagement and Fund delivery to work efficiently and effectively. Almost all colleges, OUiS, and SDS raise concerns with the annual funding cycle for the FWDF, with the timing of when training providers are informed of their indicative allocations/funding said to "come late in the day". This has a knock-on effect on strategic planning for how it will be resourced internally and can constrain training providers' ability to have conversations with employers on their longer-term workforce development needs. Aligned to this is uncertainty around whether the guidance will change from year to year.

The annual funding cycle and timing issue are also considered to impact negatively on employers - limited lead-in time; funding uncertainty; the process can feel too rushed for new employers to the FWDF; and they do not operate to academic years.

Milestones for delivery

The key milestones for receiving applications, for training to start, and for training to be completed are said to not always easily align with when employers consider and plan their workforce development activity for the year ahead. In particular, the start and end dates for the training are considered a constraint and can result in "bottlenecks".

Some challenges raised include:

• Employers may wish to spread their training out over a longer time-period.
• The delivery window for the training to start and end may coincide with a particularly busy period for the business (i.e. challenges in releasing staff).

The milestones are not conducive for employers selecting training that spans a longer period for delivery and/or higher level qualifications. While training providers can approach the Scottish Funding Council (SFC) for an exemption, a case-by-case approach can result in delays for employers.

Geography

The issue of geography was raised by a few organisations where members had multi-locations. The restriction of a single award and use of local college are seen by some stakeholder respondents as particularly challenging. This issue is also an "overhang" from the first evaluation and there is no easy or right/wrong answer but it still exists for some of the larger Levy-payers.

A wider point relates to greater geographic flexibility in the operation of the Fund. For example, a "rural uplift" that considers factors such as the higher cost of accessing training for businesses in remote, rural and island geographies.

Areas identified by stakeholders for improvement or change

Many stakeholders in this evaluation propose minor "tweaks" suggesting general satisfaction with the current approach to the management and delivery of the Fund. Others suggest a wider refresh of the FWDF to better meet the needs of employers, and for it to be operated in a way that creates a level playing field for non-college provision. In almost all cases it could be described at best as "enlightened self interest".

A common message is that the overall funding available for the FWDF could be further increased from £20 million to ensure sufficient strategic response to the growing need for reskilling and upskilling the current workforce, particularly given the well reported labour market and skill constraints. There is considered to be a need for much greater investment in this area, in particular for SMEs. Wider feedback on the two discrete routes (and pots of funding) into the FWDF includes:

• All training providers should be able to engage with any employer (i.e. Levy-payer and SMEs).
• Similarly, employers should be able to "shop around" and select the training provider(s) of their choice.
• That this has caused constraints (e.g. ability to redistribute funding from one pot to another) and for some it is also felt to have caused confusion (e.g. for those employers that need to choose one route or the other into the Fund).

As reflected above, there are relatively mixed views around whether there is a need to amend or change the current annual funding cap. There is, however, consensus that marketing and promotion of the FWDF could be improved at all levels.

In terms of Fund delivery, some specific points are raised by stakeholders, including:

• More (non-specific) flexibility in use of the funding e.g. small awards for non-accredited, off-line mentoring, etc.
• Make it easier for SMEs to access through e.g. colleges delivering training outside working hours or developing online self-help units.
• Focus on development of self-learning packages particularly for SMEs that will allow wider access and at a time that suits them.
• Packaging small asks together for larger bespoke opportunities.
• Greater opportunity for regional flexibility within a broad national framework.

Lessons learned

The main lessons learned from stakeholders for FWDF management and delivery are:

• There is a continuous need to promote wide awareness and understanding of the FWDF.
• Access to a list of Levy-payer employers would have been (and could still be) helpful.
• "Flexibility" is key, and efforts should continue to make the Fund as flexible and responsive as is possible. The guiding principles continue to be appropriate and relevant.
• Multi-annual funding could provide better security and stability for long-term planning and delivery. Sufficient lead-in time is crucial for training providers and employers.
• Academic funding and delivery cycles do not always meet the needs of employers who typically plan and operate to financial years.
• The college sector varies in resource and capacity, and with no funding to support the administration of the FWDF, this has resulted in a variety of approaches to the management, delivery, training offer, promotion, etc. – and has therefore potentially affected a consistent level of delivery across the country.
• Some funding could have been allocated to marketing at a national level. There is only value in providing funding for additional places/courses if employers/people know about it. Promotion at a national level could provide greater economies of scale.
• Engagement with SMEs is labour intensive and has increased administrative burden for many training providers.
• A more proportionate and less onerous application process for SMEs may be required.
• Forums for training providers to share experiences and to discuss issues are considered valuable.