Wednesday, 1 February 2017

Apprenticeship schemes under scrutiny as CNWL alleged fraud raises more questions

The Institute of Fiscal Studies Report on apprenticeships LINK raised a number of key issues: I draw particular attention to the highlighted issue of concern to us in Brent over the College of North West London alleged fraud by a subcontractor which led to 78 students missing out due to a non-existent course LINK:
  • Although the apprenticeship levy increases taxes on large employers, the new subsidies for employers to train apprentices mean that employers will have to pay nothing, or at most 10%, of off-the-job training costs for apprentices, up to certain price caps set by the government. This will increase the incentive to employers to hire apprentices, particularly those aged 19 and over for whom employers paid at least 50% of training costs prior to 2017.
  • This zero or near zero cost of training poses considerable risks to the efficient use of public money. Employers will have little incentive to choose training providers who can provide training at a lower price. Employers will also have a big incentive to re-label existing training schemes as apprenticeships.
  • The target of an average of 600,000 new apprentices a year in this parliament is a 20% increase on the level in 2014–15. This large expansion risks increasing quantity at the expense of quality. Although the government is trying to increase the quality of apprenticeships, the Institute for Apprenticeships may come under pressure to approve new apprenticeships quickly. Ofsted will take on an expanded (and welcome) role with respect to inspecting training providers and employers. However, it has already expressed serious concerns about the quality of apprenticeship schemes, particularly those created more recently.
  • The apprenticeship levy will put downward pressure on wages. The Office for Budget Responsibility assesses that it will reduce wages by about 0.3% by 2020–21. While only 2% of employers will pay the levy, at least 60% of employees work for employers who will pay the levy.
  • The government has set every public sector employer with at least 250 employees in England a target that 2.3% of their workforce must start an apprenticeship each year. This takes no account of big differences between organisations. Unless existing employees start apprenticeships, the targets imply around one-in-five new public sector hires must be an apprentice. Such a blanket policy cannot be an efficient way to improve skills in the public sector. It risks costly reorganisation of training and inefficient ways of working. These targets should be removed.
  • The government has also failed to make a convincing case for such a large and rapid expansion in apprenticeships. In seeking to justify these changes, it quotes statistics that show a collapse in employees’ training. However, better measures of training show a much more modest decline. The government also makes wildly optimistic claims about the extra economic activity or earnings such investment in apprenticeships could generate (with quoted benefit-to-cost ratios of over 20:1). While there is a clear need for a better-trained workforce, this cavalier use of statistics risks undermining what might be a perfectly sensible case for a gradual expansion of apprenticeships in areas where quality can be assured.
I can reveal that the company involved in the alleged apprenticeship scheme fraud at the College of North West London was  Keyrail Training Ltd/Keyrail Training Solutions Ltd, an Approved Apprenticeship Training Agency listed at the Skills Funding Agency.

Interestingly this notice was posted on the Companies House site revealing that it was dissolved in May 2016.

However the company remained on the Skills Funding Agency (SFA)  Declared Subcontractors List in September 2016 with an entry of £256,000 for the College of North West London. It was removed from the list in January 2017. The entry for May 2015 had been under the name of Keyrail Training Ltd and was for £100,000 for the College of North West London.

The alleged fraud was  uncovered in the summer of 2016 and the removal from the list may have followed the result of that investigation being reported to the SFA.

The extent of the alleged fraud clearly  supports the IFS concerns but also raises the whole issue of governance of the FE sector, monitoring and audit arrangements, the role of the SFA and risks associated with the privatisation of the sector and the lack of democratic accountability. There is also concern that Indro Sen, the UCU representative at CNWL who assisuously pressed for a full investigation into the issue remains suspended by CNWL management.

It reminds me of the whistleblowing by Hank Roberts, ATL representative at the then Copland High School when he uncovered a fraud at the school.

It is unclear what action has been taken by the police but it is perhaps noteworthy that Mark Gallagher, Brent Borough Commander, is on the governing body (Corporation) of the College of North West London.

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