Small businesses priced out of the apprenticeship market?

The youth of today. Yes, they are on everyone's minds, and not least because, in the UK, nearly 900,000 of 16 to 24-yearolds are unemployed. On top of that, annual university fees of £9,000 are squeezing some young people out of further education.

So it's no wonder that the government has swivelled its focus onto apprenticeships. Recent Department for Education statistics have shown that rising numbers of teenagers are turning their backs on A-levels in favour of apprenticeships, with the number of 16- and 17-year-olds in apprenticeship schemes rising by 15% to 49,228 this year.

This follows a report by the Institute for Public Policy Research, which claimed that most teenagers are likely to be better prepared for the workforce if they have practical, jobsbased training.

Happily, then, last October, the government took action to reform apprenticeships in England in response to the independent report, The Richard Review of Apprenticeships.

Many employers won't be surprised that the current apprenticeships system has been found wanting. Sally Beck, general manager at the Lancaster London hotel, says: "Our hotel was the regional winner in the National Apprenticeship Awards 2013. We were the best business in the South East and we only had eight apprentices. That doesn't say much about businesses in the South East, does it?"

On the face of it, the proposed framework looks sensible. The government wants apprenticeships to be employer-led, to last for a minimum of one year and:

â- Be based on standards designed by employers to meet the needs of their industry

â- Be radically simplified with a short, concise outline of the skills and knowledge needed to be competent in the job role

â- Increase quality through rigorous thirdparty assessment

â- Specify the English and maths level required

â- Be graded as pass, merit or distinction

â- Require 20% off-the-job training

â- Be open to existing employees of all ages, but only in cases where an employee needs substantial new training.

Training the trainers

One of the big areas of change is that employers will have to take on the administration of organising training and funding it. Now, training providers oversee an apprentice's training and claim funds from the government.

Training is usually a minimum of 12 months, though in practice completion of apprenticeships has often been a poor return for the funding spent. Under the new proposals, the government will give the funds direct to employers, who will have to contribute a third themselves (see panel).

Employers will also have to find funds for third-party assessments. It is expected that two-thirds of the assessment will be at the end of the training and there will be a graded apprenticeship award.

To help employers bear the increased weight of training, hospitality recruitment charity People 1st is introducing an accreditation scheme on the types of training available.

Nevertheless, the swing to off-the-job-training and the greater financial contribution expected from the industry has sparked fears that small and medium-sized employers will be discouraged from taking on apprentices.

Leading the industry

The government has been asking industry leaders, dubbed Trailblazers, to consult on the best way forward for employerled apprenticeships Phase 1 Trailblazers met in October 2013, with representatives from eight industries, including aerospace, automotive and food and drink manufacturing. They are now trialling the apprenticeship system before reforms are implemented.

Phase 2 Trailblazers, which met between March and June 2014, included hospitality and tourism, with representatives coming from big players such as Compass Group, Dorchester Collection, Spirit Pub Group, McDonald's, Institute of Hospitality and Whitbread.

People 1st managed the phase 2 Trailblazers and the panel was chaired by Kathryn Porter, divisional resourcing director of Hilton Worldwide. The Trailblazers submitted non-entry level apprenticeship standards to the Department for Business, Innovation & Skills for supervisor, manager, senior production chef and senior culinary arts chef roles.

A rallying cry from the SMEs

The fact that the majority of hospitality representatives in phase 2 were from the multinationals did not sit well with smaller operators.

Sally Beck, general manager at the Lancaster London hotel, helped to put together a consortium of six SMEs who were eventually included late in the day. These were Lancaster London, Red Carnation, the Clink, Royal Garden hotel, Chewton Glen hotel and training provider Umbrella Training.

"We wanted to represent the needs of, say, a restaurant in Covent Garden or a hotel like us - a small chain with no group head office function and no dedicated apprentice department," says Beck.

Lancaster London HR manager Aideen Whelehan acted as the SME representative, and one concern she has is that the roles submitted for the new hospitality apprenticeship standards are for management roles.

"If you think about an apprentice, you think about a 16 to 17-year-old," says Whelehan. If you pitch it at supervisory level, it's not an apprentice - it's someone who already has a job.

"We felt we needed to focus on the novice positions to get people into the industry. There is a lot of youth unemployement and we could reduce it by a third."

The SMEs are also concerned about the cost of paying third-party assessors to grade the apprentices. "The [government] funding is for the training," says Whelehan.

"Apprentices are a different level of employee," she says. "Your whole team needs to be aware. You need a buddy system, a different induction and selection process. Hospitality is the fifth largest employer, so we can really help, but the programme for a young apprentice needs to be more thought through."

Adele Oxberry, managing director at Umbrella Training, agrees: "Larger employers can afford this level of input and pastoral support, but can an SME or a micro-business?

"The results of surveys by Apprenticeship 4 England and the Association of Employment and Learning Providers (AELP) with SME employers have shown that some employers have said they cannot afford this in terms of time, resources and cash, and some have stated they will stop taking on apprentices."

And when it comes to funding, the SME consortium says one size does not fit all. Employers will have to pay one-third in cash to their chosen provider to qualify for the twothirds the government will fund.

"In some organisations, there is a misconception that these funds will be kept by the employer and this needs to be highlighted as incorrect. The funds need to be paid in full to the training provider," says Oxberry.

The AELP is campaigning for an opt-in/opt-out for SMEs across all sectors, she adds.

There is also worry about what happens to the employer's cash contribution if an apprentice leaves the scheme, as well as concerns whether the government will remove the grant of £1,500 it pays SMEs to employ apprentices.

Oxberry adds: "The hospitality sector is important and SMEs are vital, but so are apprenticeships. We simply cannot afford a decline in young people coming into our sector, so somehow we all need to make it work."

How will the funding work?

From October 2017, funding will go direct to the industry, though it will be kept separate from business accounts. For every £1 paid by the employer, the government will put in £2.

The government reckons that by giving employers control of funding, they will have to work directly with training providers to negotiate the price and ensure they are getting the best value for their company. The new system also aims to simplify the funding system, as previously there were hundreds of different rates.

The government has said it will trial the funding model to ensure it works.

Apprenticeship funding: the key points

â- A cap will be set for each apprenticeship standard at levels between £2,000 and £18,000

â- When an apprentice completes the scheme, there will be an extra payment of between £500 and £2,700

â- Small businesses of fewer than 50 employees will receive an incentive payment worth £500-£2,700

â- There is an incentive for taking on apprentices aged 16-18 who require more supervision. Depending on the cap, these apprentices will be worth £600-£5,400

â- The government will fund English and maths training at Level 1 and 2

â- The new system will fund higher apprenticeships, which go up to degree level, on the same basis

For more information, visit

â- www.gov.uk/government/publications/ future-of-apprenticeships-in-englandguidance- for-trailblazers

â- www.people1st.co.uk/apprenticeships

Apprenticeships timeline

October 2014 The first meeting for phase 1

March 2014 The first meeting for phase 2

June 2014 Talks completed The standards for hospitality and travel supervisors, managers, senior production chefs and senior culinary arts chefs are awaiting ministerial approval. The result of the submission was expected as The Caterer went to press.

1 August 2014 Cut-off for applicants to become phase 3 Trailblazers

2015 The transition will start

2017/18 The new apprenticeships will become the industry standard (although they will be available from this summer)