Dishonest organisations and training suppliers jeopardise success of the apprenticeship levy

A new report warns that employers and training providers might plan to use the levy funding but not provide the expected training

Unscrupulous training companies and employers conspiring to take money in return for little or no training threaten to derail the new apprenticeship levy, a new report by the Commons public accounts committee has warned.

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The introduction of the levy, due to start next year: “increases the risk that some stakeholders may behave in unintended ways,” according to the committee’s report on the apprenticeship programme, released this week.

“Employers and training providers might collude to recover and share levy funds while offering little or no genuine training; employers might artificially route other forms of training into apprenticeships; or employers might take on apprentices as cheap labour with no intention of retaining them once the apprenticeship ends,” it warns.

Such abuse of the system “would diminish the potential benefits of the programme and damage its reputation,” the report states.

Ministers and civil servants need to learn from past mistakes, such as the scandal surrounding the Individual Learning Accounts programme that saw it closed in 2001, amid allegations of fraud and abuse estimated at almost £100 million. 

“The Department must not repeat the sorts of mistakes that were made when Individual Learning Accounts were introduced in 2000 which suffered from a lack of checks on learners, providers, and the quality of learning; and poor contract management which led to substantial fraud and abuse,” says the report.

Concern over the risk of the apprenticeship levy suffering a similar fate prompted the Department for Education (DfE) and the Skills Funding Agency (SFA) to create a scrutiny group in June, composed of people from government and the private sector, to “consider the risks of fraud and gaming that might arise.” The SFA has “lead responsibility for managing these risks” and has identified eleven key risk areas so far.

However, more needs to be done to mitigate against abuse of the new levy. The DfE needs to identify the risks associated with potential abuse of the system and address them from the start, recommends the report. It should also be clear “who is responsible for managing the risks, detecting problems as they arise, and taking action quickly should concerns emerge.”

It also highlights concerns over the proposed Institute for Apprenticeships, claiming it is not clear how it will run and “whether it will have the capacity and capability to fulfil its functions.”

And the DfE is criticised for focussing on large companies at the expense of Small and Medium-sized Enterprises (SMEs), many of whom “have little awareness of the apprenticeship reforms underway, despite the fact that this group employs about half of all apprentices in England.”

When it comes to measuring the success of the apprenticeship programme, the DfE needs to report on outcomes over and above the mere number of places created.

And chronic delays in developing a new set of apprenticeship standards mean that they are now three years behind schedule and will not be ready until 2020.

Meg Hillier MP, chair of the committee, commented: “The Government needs to get the details of this programme right now or risk failing the many people it is intended to support.”

Responding to the findings of the report, Robert Halfon, the Apprenticeships and Skills Minister, said:We are committed to not only achieving 3 million apprenticeship starts by 2020, but also to driving up the quality of apprenticeships.”

He added: “We are working closely with employers to ensure we track the benefits of apprenticeships and ensure quality continues to improve.”


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