Scottish apprenticeships come under the microscope

Delivering his recommendations in June of last year, following a review of the post-school skills sector in Scotland, James Withers came down firmly in the latter camp.

Mr Withers, a consultant who previously served as chief executive of Scotland Food & Drink, described a “landscape of tensions” with agencies “battling to secure their roles and advocate for their distinct parts of the system”, rather than working in collaboration.

“Users trying to access or navigate the system – whether individuals or employers – struggle to know which of the many entry points to use or which narrative to adopt,” he wrote. “They expend effort engaging with multiple bodies at different levels to try to find the advice they need. I consistently heard that the landscape is cluttered and complex.

“I would contend that it is not necessarily complexity that is the problem, it is confusion.”

About 95% of all firms that take on apprentices are SMEs or micro businesses with 10 or fewer staff, meaning they have less capacity to navigate the maze. There are also bandwidth issues within the colleges that provide the classroom element of learning to roughly a fifth of all apprentices in Scotland.

The majority get the educational side of their work-based qualifications from one of almost 100 private training providers operating in Scotland.

Laura Dunphy is director of learning and development at Crerar Hotels, which partnered with Borders-based SDC-LEARN to launch its new Early Careers programme in June this year. Ms Dunphy said the freedom to offer a “totally different delivery approach” is vital to the success of apprenticeships, particularly in the hospitality sector.

Laura Dunphy (Image: Contributed)

“The beauty of work-based qualifications is that the team member can work through it at their own pace,” she explained. “And they can demonstrate what they know in a way that actually suits them, and suits their individual learning style.”

Modern Apprenticeships (MAs) account for the lion’s share of apprenticeships in Scotland, with Scottish Government funding for these currently distributed by Skills Development Scotland (SDS).

According to SDS, there are currently 38,000 modern apprentices in training in Scotland, with funding to support 25,500 new entrants each year.

While there are dozens of professions in which MAs are on offer, more than a quarter of those in training are working in the fields of construction and the built environment.

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These sectors are in desperate need of additional workers. Paul Sheerin, chief executive of Scottish Engineering, said his industry easily needs double the number of new entrants currently coming through.

“Across the UK we didn’t train enough apprentices for decades, from the early 1980s onwards,” he said. “I would say it was a cultural move away from the importance and the value of manufacturing and engineering.

“The UK at that time moved to a financial services-led kind of obsession, where we thought our economic development and growth should be, so while other countries that we would compare ourselves against like Germany and Switzerland and even Italy remained steadfast in seeing the importance of engineering and manufacturing, we tailed away from that, and we tailed away in terms of apprentice numbers as well. Where we are now is we are paying for the sins of the past.”

Apprenticeship Levy

The funding of apprenticeships is a bone of contention for many and has come under increasing scrutiny after the Scottish Training Federation (STF) issued a statement earlier this year declaring a freeze on new MAs from April 1.

STF is a lobbying organisation representing the interests of training providers. The majority of its membership is made up of private training providers, although it also has some members among colleges and employers.

Back in the spring it warned that because the Scottish Government had yet to approve the budget for this year’s apprenticeship intake, SDS was “unable to issue contracts to training providers, colleges and employers who deliver Modern Apprenticeships, resulting in a freeze on new places being available”.

Stuart McKenna, chief executive of STF, said the delay in getting budget approval ultimately amounted to about 10 days, which wasn’t “too much” over a period of 12 months. However, the STF was keen to avoid a repeat of the five-week delay experienced the previous year.

“That did have a knock-on effect because it had an impact for the cashflow of the organisations that deliver apprenticeships,” he said. “They were expecting to get income from new starts, and employers weren’t able to hire new staff and put them on an apprenticeship until the funding was confirmed.

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"Young people who had been expecting to start an apprenticeship on April 1 had to wait another five weeks.”

Scottish Education Minister Graeme Dey has accepted the premise of most of the recommendations within the Withers Report, and has followed up with the launch of a major consultation on simplifying funding for universities, colleges, apprenticeships and student support. Variously handled by SDS, the Scottish Funding Council (SFC), and Students Awards Agency Scotland (SAAS), it is widely expected that these funding streams will ultimately be brought under one roof following the closure of the consultation on September 20.

“Ministers will make a final decision on the way forward following an analysis of all the evidence collected through the consultation and development of an outline business case,” a Scottish Government spokesman said.

Another point of contention for industry and employers is the lack of transparency around the amount of funding from the UK-wide Apprenticeship Levy that is spent on apprenticeships in Scotland.

Launched in April 2017, the Apprenticeship Levy is paid by employers whose annual wage bill exceeds £3 million. The amount payable is 0.5% of the total wage bill, minus a £15,000 “levy allowance”.

Graeme Dey (Image: PA)

Westminster provided figures on how much of the levy it passed on to devolved nations for the first two years after it was introduced, but since then this has ceased to be itemised within Scotland’s annual block grant.

The “best guess” among industry observers, based on the number of companies required to pay the levy in Scotland, is that the figure is between £350m and £400m.

“A particular frustration for us just now is we estimate only about a third of what companies pay into the Apprenticeship Levy actually gets spent on apprenticeships in Scotland,” said Mr Sheerin at Scottish Engineering. “The rest we believe probably gets spent on other skills areas.

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“We would like to see that directly geared so that what gets paid in Apprenticeship Levy get spent on apprenticeships. That is not a matter for the UK Government, however. That’s one we will need to work our way through with the Scottish Government.”

Although not part of the current consultation, Mr McKenna said the STF has and will continue to lobby in Holyrood to raise the level of government contribution towards apprenticeships.

“The money that government offers providers and colleges hasn’t changed for over a decade, which I think is outrageous,” he said. “I often say to people, if you were being paid the same today as you were 15 years ago, would that be acceptable?

“The reality is that is what government has done to us. We’ve got funding rates that are not adequate.”

'Pots of money flying about'

Others, however, contend there is also a need for greater efficiency.

There are more than 100 management agencies in Scotland, including colleges and commercial operators, that tender every year with SDS for apprenticeship contracts. These training providers liaise with the 24 colleges that do the classroom training, and in some cases the management agency is the college itself.

“When you start looking at that amount of third-party organisations, you can begin to understand that feels very cluttered in terms of shifting money about, from government to Skills Development Scotland to a management agency to a college and then to an employer,” said Ian Hughes, strategic director in Scotland for the Construction Industry Training Board (CITB).

The system “is effective” in the sense that apprenticeship numbers in Scotland have held steady, whereas in England participation has fallen by a third within the last eight years.

Ian Hughes (Image: Peter Devlin)

“But it’s inefficient in terms of the number of touchpoints, so every pound is losing pennies as it goes on the journey,” Mr Hughes added. “There’s pots of money flying about everywhere.”

Ms Dunphy at Crerar Hotels said Scotland’s particular way of handling work-based training is best suited to the needs of employers in her sector, adding: “Scotland obviously run their apprenticeships very differently from England.

“Our apprenticeship delivery model in Scotland is actually really unique and fit for purpose because in Scotland we have the use of training providers so that offers a totally different delivery approach as opposed to England where you just use institutions to deliver for that apprenticeship.”

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Mr McKenna at STF agreed that “on the whole” apprenticeships in Scotland have had much more success of late than in England.

“It’s got really good achievement rates – I think we’re up to 79% this year,” he said. “It’s a really good programme so in terms of making improvements to it, we really are talking about improvements at the margin as opposed to anything fundamental.

“It may seem to an outsider a bit kind of cluttered and busy, and all sorts of different folk getting involved, but it does work, and I think one of the successes is because it’s got these different people from different organisations working together, who understand what is going on.”

Too many cooks?

Under the recommendations put forward by the Withers Report, a single national funding body will be created with responsibility for administering and overseeing the delivery of all publicly funded, post-school learning and training provision.

It has been suggested that SDS could be “substantively reformed” to focus on the development of a national careers service. Mr Withers has also called on ministers to carry out a comprehensive audit of post-school qualifications and pathways with a view to “rationalising and refining publicly funded qualifications to produce clearer articulation between qualifications and awards”.

Though not in favour of wholesale rationalisation, Mr McKenna at STF has some sympathy with this view. “It may well be that we offer too many apprenticeships right now,” he said. “It may be that we are not funding some of them highly enough and we might have to make choices about just not funding some [of them] – paying more and having fewer.

“But the government doesn’t seem to want to have that conversation just now. I feel as if it just wants to let things limp along, and the danger with that is that operating margins for companies have become so small that it’s only a matter of time before they fall off a cliff.”

James Withers (Image: Nick Callaghan Photography)

The CITB is Scotland’s largest management agency, recruiting 1,500 apprentices annually on behalf of its members.

Mr Hughes said the organisation receives approximately £9m of government money annually via SDS, but the “whole package” of CITB grants to employers and apprentices comes in much higher, at around £30m.

“So essentially what Withers is recommending is that the public sector receives public money to carry out its part in training apprentices, and the industry tops that up in terms of the rest that is required,” he said. “That’s the CITB model.”

He added: “The bigger ticket for me is retaining the partnership model but with less partners. That is the thing we are keen to find out.”

Huge amounts of work to be done

From an industrial point of view, apprentices are a key component in helping to plug a gaping skills gap that is only going to get worse as demands on the sector increase in the push to decarbonise the economy, deal with the impact of increasingly inclement weather, and renew the UK’s crumbling infrastructure.

According to the UK Trade Skills Index 2023, the construction and trades industry in Scotland needs an additional 31,000 new recruits over the next decade.

One of the factors exacerbating this labour shortage is its ageing workforce, with more than a third currently over the age of 50, as well as the exodus of EU workers following Brexit. This presents “huge challenges” for critical infrastructure, according to Mr Sheerin at Scottish Engineering.

“The big one front and centre is the climate emergency,” he said. “That presents a huge opportunity in offshore wind – it presents an opportunity for fabrication, and it presents an opportunity for that to be onshore in the UK, but right now we don’t have the people and the skills for that, so that’s a huge shortage.

Paul Sheerin (Image: Scottish Engineering)

“The second is wherever that equipment is built, to bring that electricity on to the shore and then distribute it, we need to fundamentally upgrade our grid. Our electricity distribution network is creaking at the seams.”

He added: “At the same time, we have a huge national shipbuilding programme for the UK’s security and defence which we can only imagine will be added to with the geopolitical situation.

“And it just keeps going on – decarbonising transport, decarbonising heat, all these things will have to happen if humans want to stay on this planet, and they all require work-based learning skills.”

CECA Scotland is the trade body for the country’s civil engineering contractors with about 100 members ranging from large multinationals to SMEs. Its chief executive, Grahame Barn, said the construction sector as a whole needs to recruit 5,000 new people annually to keep up with projects already in the pipeline.

“In the main the work that we have to do in decarbonising the economy is going to fall to the civil engineering industry to deliver because we have to decarbonise the rail network, and that is essentially electrifying the network,” he said. “We have to get renewable energy generated and then transmitted to the areas where we need it, and again it is civil engineering that is involved in that.

“And if you think of our water infrastructure – the flooding risks due to the changing weather patterns that we have – we need flood defences built, and also Scottish Water is struggling with ageing assets.”

Alternative paths?

Mr Barn said the use of “nonprogression awards” by colleges to give trainees skills in hand tools does not produce the workers his industry needs.

“[The colleges] think that they will all become joiners or bricklayers or painters and decorators but the reality is there aren’t enough jobs for those skills as it stands at the moment,” he said.

“There are plenty of other jobs in the construction sector. However, we don’t need people trained in hand tool skills – there’s not much joinery that goes on in building a bridge or putting in a new reservoir, nor bricklaying, to be honest.”

To help address this gap, last year the group launched its CECA Scotland Academy, a six-month, full-time college course covering areas specifically chosen by its members to meet the general requirements to become a civil engineering operative. It includes units such as road drainage, kerbs and channels, and forming, laying and finishing concrete.

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“We have a rising workload ahead of us in the next two decades in Scotland and we have an ageing workforce,” Mr Barn explained. “That isn’t a good mix, so we looked at the existing settled training regimes through colleges and found that they weren’t delivering the type of person that we were needing to employ.

“So we took it upon ourselves to design a course that we needed and we then took that to the colleges and the funding council and said: ‘Look, if we are to get to a point where we do decarbonise the economy by 2045, it’s going to rely heavily on civil engineering contractors to do that work.’ We need a workforce that has the basic skills that we need to employ them.”

He describes it as a “new way of working” between industry and colleges, the latter of which had to be persuaded at CECA’s insistence that the courses be run on a full-time basis and take place outdoors.

“This came as a bit of a shock to colleges, because they’re set up to do classroom learning,” Mr Barn said.

(Image: Contributed)

“But there’s not much point in doing classroom learning if at the end of the course they suddenly realise that civil engineering is done outside in all weather conditions. If the young people don’t actually fancy that, it’s a waste of time for everyone.”

The CITB works in conjunction with other organisations to recruit older workers from specific demographics such as military veterans, but Mr Hughes said the reality is there are limits to what can be achieved by retraining people at a more advanced stage in their career.

Referring to a programme in Aberdeen designed to retrain redundant offshore scaffolders previously working in the North Sea, he said: “The starting salary for a scaffolder being trained is £15,000 per annum. These offshore guys were earning £50,000 or £60,000 or £70,000.

“They just weren’t interested. It just wasn’t a big enough incentive salary-wise to bring them back in. They would rather run a taxi or do another type of job than get that type of training.”

Mr Sheerin said almost all engineering apprenticeships run for four years, but there are “question marks” over whether that must be the timeframe.

“Is that just because we have always done it that way? I think what we see is that as the pressure comes on, we’ll see some different ways of looking at that and shortening it to make sure we can put the skills we need through faster and deliver them.”