Flexible Workforce Development Fund (FWDF): evaluation

8. Conclusions and Recommendations

Introduction

This section presents our conclusions from the evaluation, in line with study aims, and then sets out recommendations for consideration by the Scottish Government.

Conclusions

Study Aim 1 - Consider the core principles, intended outcomes and aims and objectives of the Fund, and assess the extent to which these have been achieved and the extent to which they have had the impact they were expected to have

The aim of the Flexible Workforce Development Fund (FWDF) is to provide employers with flexible workforce development training opportunities.

This is with a view to supporting inclusive economic growth, addressing skills gaps, and boosting productivity through the upskilling or retraining of employees for whom apprenticeships are not an appropriate route to address their training needs. A key finding from this evaluation is that the Fund is continuing to deliver on this ambition.

The FWDF is universally considered by stakeholders consulted in this research to be a much needed and valued intervention, and there is deemed to be a clear, strong, and continuing rationale for the Fund. Not only for the role it can continue to play in supporting inclusive economic growth, but also in supporting COVID-19 recovery.

Our telephone employer survey of 203 employers found that employers consider people to be the biggest asset a business has, and that workforce development is viewed as hugely beneficial. Almost all employers participating have current skills gaps, and identify the main drivers of change as keeping pace with changing customer expectations, digital innovation, and COVID-19 recovery. Among other things, this reinforces the need for a continued focus on workforce development.

The evaluation found that the guiding principles that underpin the FWDF have been substantively achieved. They also remain appropriate and relevant. The main challenges in implementation relate to the principles of simplicity, minimal administrative burden, and responsiveness to employer demand.

Simplicity. All evaluation participants consider it appropriate that relevant checks and balances are in place to ensure good use of public funds, however, it is equally important to ensure that processes remain proportionate to the relevant annual funding cap. Our employer survey found that employers are broadly satisfied with their engagement with the FWDF.

In contrast, stakeholders taking part in the evaluation raised some issues. Some hold the view that the application (and registration) process could be simplified and streamlined, in particular for Small and Medium Enterprises (SMEs) to ensure it is accessible and proportionate.

Minimal administrative burden. Colleges/The Open University in Scotland (OUiS) vary in size and scale and therefore in available resources, capacity, and commercial focus. Further, training providers do not receive an allocation to support the administrative costs of managing, delivering, and monitoring the FWDF.

There also continues to be a lot of support to make it as easy as possible for employers to access the Fund, and many employers report an increase in the administrative burden since the Year 4 changes. Employers identify administrative burden as one of number things where there is considered scope for improvement.

Responsiveness to employer demand. While employers in this evaluation express high levels of satisfaction with training providers and the training, there is less satisfaction for aspects related to tailored course design. There appears to be potential employer demand for more tailored and/or bespoke training and the training provider(s) of choice. It has only been in Year 5 that 5% of the funding allocation for each college/OUiS can be used for the development of new training provision. Given the varied capacity across the college sector, this funding may be used to differing degrees.

Study Aim 2 - Explore the reach of the FWDF and the extent to which emerging employer demand has been understood and met

The evaluation found that the Levy-payer employer strand of the FWDF is firmly established. What we can say about reach and engagement of the FWDF is that:

• From the data analysed, around 1,350 unique Levy-payer employers have been supported to date i.e. either through the Scottish Funding Council (SFC) or Skills Development Scotland (SDS) route. While the numbers have fluctuated on an annual basis, the total number supported by colleges has increased in each academic year when compared to the pilot year.
• Spend across the college network varies. This largely reflects factors such as how the funding is allocated to each college/college region, the number of Levy-payer employers in each region, and the extent of college resource, capacity and commercial focus.
• The estimated penetration rate has typically been between 16% and 18%, and overall it is 31%. This suggests that a large proportion of Levy-payer employers have not accessed the Fund.
• There has been a good level of repeat business among Levy-payer employers engaging with the FWDF.

It has been suggested by stakeholders that many Levy-payer employers remain unaware of the Fund. Indeed, both the Scottish Employer Perspectives Survey 2021 (May 2022) and CIPD - Gaps and Opportunities: Employer views on skills policy in Scotland report (May 2022) found low awareness of schemes or initiatives that help people development, including the FWDF.

Other Levy-payer employers may not consider the FWDF relevant. The £15,000 annual funding cap may be too low for some Levy-payer employers (particularly the very large or multi-site employers).

It is not possible to tell from the data we have been provided with by colleges (via SFC), the extent of new FWDF clients per annum. What is clear is that there is strong repeat demand for the FWDF. In part this reflects Levy-payer employers looking to get something back from their contribution to the Apprenticeship Levy, even if it is still considered a "a drop in the ocean" for some.

There has not been funding set aside for a national marketing campaign for the FWDF, and levels of marketing and promotion have varied across the college network. There has been limited marketing of the SDS route. Even after four years of delivery, there is scope to improve awareness and understanding of the FWDF among Levy-payer employers. Should the funding cap remain at £15,000, there will always be some Levy-payer employers for whom the FWDF is not considered appropriate, relevant or proportionate.

The FWDF has only been available to non-Levy-payer SMEs since Year 4. It will of course be important that this is given sufficient time to bed in and for further awareness raising. Key points to note include that:

• A total of 911 non-Levy-payer SMEs have been supported to date.
• Overall reach is low, and there is scope for more non-Levy-payer SMEs to be supported in future years. It has a much smaller budget compared to Levy-payers, and there has been limited marketing at a national level. Demand will also have been affected by COVID-19.
• Levels of engagement across the college network are varied.

Wider feedback from stakeholders confirms strong support for making the Fund accessible to non-Levy-payer SMEs given the make-up of the business base in Scotland, and that rural geographies have a particular reliance on micro and SMEs.

Our data review shows that many employees have been supported with upskilling and reskilling through the FWDF. The number of employees within Levy-payer employers supported has increased significantly since 2017/18 and the number of non-Levy-payer SME employees supported is circa 2,200. Many of these may also have undertaken multiple training courses.

Employers in our telephone survey are largely positive about the training itself. However, there is least agreement with the following statements:

• They devised the training content from scratch to meet our needs.
• They were willing/able to tailor an existing training course to better meet our needs.

The development of bespoke provision may be constrained by a range of factors, including identifying scale and nature of demand, training provider capacity, time to develop bespoke training and the ability of colleges to develop single/one-off type bespoke training.

Study Aim 3 - Understand how the management and delivery of the FWDF has been experienced by those engaging with it (for employers, individuals and wider stakeholders) and identify any enablers or challenges

Stakeholders views are that the Fund continues to be well managed, and the main partners – Scottish Government, SFC and SDS work well together. Many stakeholders propose only minor "tweaks" suggesting general satisfaction with the current approach to the management and delivery. However, some stakeholder groups (e.g. some wider stakeholders and independent training providers) 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".

There are currently two pots of funding – one for Levy-payer employers and another for non-Levy-payer SMEs. The main challenges of this model relate to an inability to redistribute funding from one pot to another in response to employer demand, and not all training providers are currently able to support all employers.

The funding cap is also worthy of further mention:

• The funding cap for non-Levy-payer SMEs is generally considered by stakeholders to be pitched at the right level, albeit there is recognition that £5,000 may be limited for those at the larger end of the SME spectrum.
• There continue to be two views on the funding cap for Levy-payer employers. Some stakeholders consider £15,000 appropriate, while others are supportive of greater flexibility where appropriate, including some support for a tiered model aligned to the contribution an employer makes to the Apprenticeship Levy or by size of employer.

A majority of the 203 employers in the telephone survey consider the funding cap to be appropriate, albeit less so among Levy-payer employers.

Study Aim 4 - Examine the benefits and impact (both positive and negative) that the FWDF has had for businesses, individuals participating in training, and the colleges who have delivered the training in terms of training needs, addressing the skills gap, and workforce and business development

From the data and insight analysed in this evaluation, the FWDF has undoubtedly benefitted everyone involved, albeit in different ways and to varying degrees. Taken together, the feedback from stakeholders, employers and employees identifies a common set of benefits and impacts.

The main benefits reported through our employer and employee surveys are further reflected in the high levels of satisfaction reported elsewhere in the primary research. Our assessment is that they also reflect the intended outcomes of the Fund developed and agreed by the Scottish Government and partners.

Some issues were, however, identified as constraining the level of benefit and impact for some stakeholders:

• Not all training providers are currently able to support all employers (i.e. OUiS and independent training providers).
• Out with OUiS, the extent to which other Higher Education Institutions (HEIs) have been engaged in FWDF delivery was observed to be very limited.
• Some stakeholders feel that employers have restricted choice on the training provider(s) they can use, with feedback that there could be more value in employers accessing multiple training providers to better meet their needs.

Study Aim 5 - Examine the impact the Fund has had on tackling inequality and supporting those with protected characteristics including any enablers or challenges

A fair assessment from the secondary and primary research undertaken in this evaluation is that the Fund has helped to tackle inequality to some extent. Tackling inequality is, however, not perceived to be the main purpose of the FWDF. Employers report that equalities issues are identified and addressed through other internal mechanisms. Further, stakeholders (e.g. training providers and delivery partners) note that the decision on which employees participate in FWDF supported training rests with employers, and that inequality is a wider structural issue that manifests itself in the labour market and society.

The data provided by the SFC in relation to equalities shows that while age and gender inequality are more represented, disabled people, minority ethnic groups, and those living in the most deprived data zones continue to be under-represented. Equalities data is slightly patchier from SDS and shows a mixed picture (e.g. high levels of senior staff undertaking training). This reflects the self-reporting nature of some of the data, however, more encouragement could be given to help improve the quality and completeness of monitoring data. The findings of the employer survey supports the insight from the secondary data.

Further, employers in this evaluation confirm that there is not a conscious effort to target those with protected characteristics. Rather, training is available for all employees. It is, however, important that employers accessing the FWDF are aware of the importance the Scottish Government places on taking action to address inequality and meaningful discussions should take place with employers.

Study Aim 6 - Identify key learning points and provide evidence-based policy recommendations on the future of FWDF, and on aligning workforce development within the future skills system

The main lessons learned are summarised in Section 5 of this report.

Recommendations

The FWDF is largely working well and delivering against its original purpose and based on the findings from this evaluation, should therefore continue substantively on the same basis. The recommendations, presented in the Executive Summary, are generally light touch although we believe they would offer some improvements to the current Programme.