FDF response to the Apprenticeship Levy survey

Transcription

1 FDF response to the Apprenticeship Levy survey 1. The Food and Drink Federation (FDF) is the voice of the UK food and drink industry, the largest manufacturing sector in the country. The industry has a turnover of 83.7bn, which is 16% of total manufacturing turnover, and Gross Value Added (GVA) of 21.9bn. The industry employs around 400,000 people. 2. In recent years, food and drink manufacturing has been both an exporting and a productivity success story. Productivity in food and drink has grown by 11 per cent in the last five years, compared to 0.5 per cent across the whole economy, but the skills gap threatens our continued competitiveness. The need to close our sector s skills gap has never been more urgent with the UK s decision to the exit the European Union. 3. We will need 130,000 new recruits by 2024 to meet the skills needs of the sector, caused by an ageing workforce, talent shortages, STEM skills gaps and historically low apprentice numbers. Our wide geographic spread across the UK and huge proportion of small and medium-sized businesses, many of whom do not form part of a larger supply chain, has led to highly fragmented apprenticeship provision. The levy is therefore an opportunity to improve the uptake and quality of apprenticeships in our sector but only if it is implemented in the right way. 4. Last year FDF launched our sector s ambition to increase the number of apprenticeships within our workforce from one to three per cent by We believe we can achieve our ambition, as long as Government's policy framework instils confidence and encourages businesses to invest for the long-term. Key messages 5. The scale of the reforms being introduced through the levy is a major undertaking which is being rushed to meet a political timetable. It will be a huge challenge for businesses and government to be ready for April FDF is calling for a delay to the start date of the apprenticeship levy until April This would allow time to develop a more effective system from the outset, for example the ability to transfer levy funds. Food and drink manufacturers are keen to work with government to further develop quality a system that supports quality training. 6. As well as this, given the additional burdens created by the forthcoming EU exit, we would urge the Government to consider a delay to the start, as this will generate further costs. There are important issues that require clarity relating to the EU exit and labour movement, until the Government is clear with its strategy, the uncertainty means that businesses will find workforce planning even more difficult within the current timescale. This coupled with the National Living Wage which is due to increase in April 2018, is causing great concern for companies due to the forthcoming extra costs. 7. FDF believes the proposed system misunderstands where the greatest value of training lies. Unless businesses can recoup more of their associated costs from Food and Drink Federation 6 Catherine Street London WC2B 5JJ Tel: +44 (0) Fax: +44 (0) Web: Registered office as above. Registered in London with limited liability. Certificate of Incorporation no VAT number: The Food and Drink Federation seeks to ensure that information and guidance it provides are correct but accepts no liability in respect thereof. Such information and guidance are not substitutes for specific legal or other professional advice.

2 the levy, many may be forced to scale back numbers or quality. For the levy to incentivise quality, the funding mechanism must reward relevant and quality training. The government should introduce an allowable expenses regime to support businesses deliver quality provision: for example, capital or staff costs, off the job training or guided learning hours. 8. The food and drink industry has come together and invested a considerable amount of time and expertise developing new standards, effectively moving towards an employer-led system. However the restrictions on levy spending and the proposed funding rules suggest that while firms are paying for skills provision, the rules are all being set by government. The role of the Institute for Apprenticeships (IfA) as a genuinely independent business voice overseeing the levy will be critical to employer confidence in shaping and overseeing the system. 9. In particular we are very disappointed to see government has reduced the funding for Food and Drink Engineering Maintenance and Food Technology Apprenticeship standards, despite industry providing sound evidence of the actual cost to deliver these new, higher quality standards. Getting this wrong could hinder delivery of the required growth in apprenticeship numbers and quality in the largest sector of manufacturing in the UK. In order to address the skills gap facing our industry, employers must be allowed to use sufficient monies from their levy purse to fund these new, higher quality Trailblazer standards. We urge government to reconsider the funding rates for Food and Drink Engineering Maintenance and Food Technology Apprenticeship standards and work with employers to determine the correct funding bands for these vital STEM apprenticeships. This is even more important for our sector where we have highly fragmented apprenticeship provision and whilst we are building volumes we still have low apprentice numbers. A lack of funding for key apprenticeship standards will only serve to discourage providers to build quality provision for our sector. 10. Co-operation is needed across the UK on levy funding to ensure we have an apprenticeship system that reflects the need of UK-wide employers operating across borders. 11. FDF is currently working to improve links with employers and schools; however we are concerned about the timescale for teachers to promote apprenticeships to students to allow for a significant uptake in the short term. This is another reason we feel it would be worth postponing the levy to ensure the success of the apprenticeships scheme. Funding Bands 12. Food and drink businesses have been heavily involved in all aspects of the development of new apprenticeship standards and have also been involved in the work to identify the appropriate costs of delivery. Food and drink manufacturers, working with the National Skills Academy for Food & Drink and providers, agreed the new rates with the Skills Funding Agency (SFA) which represented a fair cost for the new, higher quality standards.

3 13. We are therefore very disappointed to see the latest proposals have reduced the funding for the brand new Level 3 Food and Drink Engineering Maintenance Apprenticeship and we understand will also result in a reduction of funding for the Level 3 Food Technology Standards. We suspect agreed rates for other standards will follow suit. The engineering rates has reduced from 27,000 to 18,000; for food technology we have been advised that the previously agreed rate will be reduced from 19,000 to 18,000 and indeed on new standards in development we are being advised of very low rates. The true cost of the Level 3 Food and Drink Engineering Maintenance Apprenticeship is 30,000 including end point assessment. 14. Firstly our concern is that the impact of these cuts will be significant in that there will be no incentive for providers, given we already have highly fragmented apprenticeship provision and current lack of volume. An absence of funding for key apprenticeship standards will only serve to discourage providers to build quality provision for our sector. This will impact significantly on the young talent pool and skills in the industry. This is due to both engineering and food technology apprenticeships routes being used for recruiting young people as part of a drive to increase the STEM skills. Secondly we need the funding rates to be set at the right level to support the creation of pathways up to degree apprenticeships. 15. We want apprenticeships to be of the highest quality and with these rates either the providers will not offer or potentially worse still will try to deliver and offer a poor quality offering that will devalue the apprenticeship brand. It is unfair that employers should have to pay the difference in terms of additional money for the delivery of these standards because the funding rate is incorrect meaning they cannot use their levy funding. Employers would have to top up the additional money needed to ensure apprentices are at the correct level. The reduction in funding will have an impact on the use of the levy and training budgets. STEM Apprenticeship Funding 16. We are pleased to see recognition of the food and drink manufacturing industry as a STEM sector, in so far as all pathways are designated as being in Manufacturing Technologies. We believe that STEM can be defined at this industry level or indeed by considering the core knowledge and skills needed for individual standards. For our industry STEM requirements manifest themselves in the following types of activity: Utilising, specifying, maintaining or developing new processes, equipment and technologies Using statistical methodologies for analysing and improving processes and technologies Knowledge and skills around traditional STEM areas including food science and engineering Scientific principles underpinning food processes, ingredients and their interrelationships Microbiological knowledge and skills around product handling and production methodologies Utilising ICT to develop complex supply chain models around forecast demand, stock keeping and scheduling

4 Analysis of trends, data and information to identify root causes of problems and to determine future improvements Co-investment rate and incentives 17. We believe incentives and co-funding should encourage take-up particularly among SMEs but are less likely to make a difference for larger employers. The main issue is to ensure the funding rates are correct for apprenticeship standards and frameworks as a co-funding rate of 1:9 of an insufficient amount means that delivery will not take place. We feel that rates would be better based on current evidence from the pilot schemes. 18. Incentives for levy payers to take on year olds are welcome and should help support provision in this age group. However experience would suggest that it would cost more to support a young person undertaking a longer apprenticeship than it does a shorter one and so a flat fee regardless of duration of the training may not work. We would perhaps suggest a percentage uplift according to duration would be more appropriate. Traditionally apprentices come into the food and drink manufacturing sector later in life so we welcome the single funding rate approach for all ages with a top up for younger learners as this is simple and easy to understand. Funding rules 19. From the outset, FDF has called for the ability to transfer funds across the sector and supply chain from the beginning of the process. This is crucial if we are to bring together levy investment and in turn apprentice volumes to strengthen provision within our sector and to build numbers within our supply chain, which are particularly low in the farming sector. Given our wide geographic spread across the UK, we need to create food and drink apprentice communities to benefit the huge proportion of small and medium-sized businesses in our sector and along the food supply chain from farming to retail. The fact that the proposal to allow the transfer up to 10% of levy funds is only possible in 2018 reinforces the need to delay implementation in order to deliver an effective system. 20. We welcome the proposed flexibility for spending on equivalent and lower level qualifications. It is positive that firms will be given more flexibility to fund equivalent and lower level training so they can use levy funds to upskill, including in their existing workforce, to fit their needs. 21. Cross-border rules must be simple and reflect business behaviour. A fairly broad definition of workplace is necessary to allow UK employers the flexibility they need to train UK-wide. Business will need guidance on how this is applied in practice.

5 The UK Food and Drink Manufacturing Industry The Food and Drink Federation (FDF) is the voice of the UK food and drink manufacturing industry, the largest manufacturing sector in the country. The industry has a turnover of 83.7bn, which is 16 per cent of total manufacturing turnover, and Gross Value Added (GVA) of 21.9bn. The industry employs around 400,000 people. Exports of food and non-alcoholic drink have doubled in the last ten years, amounting to a worth of 12.8bn in The following Associations actively work with the Food and Drink Federation: ABIM ACFM BCA BOBMA BSIA BSNA CIMA EMMA FCPPA FOB PPA SMA SN SNACMA SPA SSA UKAMBY UKTIA Association of Bakery Ingredient Manufacturers Association of Cereal Food Manufacturers British Coffee Association British Oats and Barley Millers Association British Starch Industry Association British Specialist Nutrition Association Cereal Ingredient Manufacturers Association European Malt Product Manufacturers Association Frozen and Chilled Potato Processors Association Federation of Bakers Potato Processors Association Salt Association Sugar Nutrition UK Snack, Nut and Crisp Manufacturers Association Soya Protein Association Seasoning and Spice Association UK Association of Manufacturers of Bakers Yeast United Kingdom Tea & Infusions Association Ltd FDF also runs specialist sector groups for members: Biscuit, Cake, Chocolate and Confectionery Group (BCCC) Frozen Food Group Ice Cream Committee Meat Group Organic Group Seafood Committee For more information contact: Caroline Keohane Competitiveness Policy Manager caroline.keohane@fdf.org.uk