Let’s demand an Ace of Cost Base

We all talk about income in education. Income, income, income. That’s all I hear. And there’s a good reason for that. There’s no doubt that in education, as in all public sector organisations, Government doesn’t want any public perception of fat cat principals, or directors of training providers with huge bonuses. So income it is. But thinking about nothing more than income often leads education providers to debate the wrong topics. Let me explain what I mean.

No fatcats here - just a very large fish!

With that in mind, rather than discussing what impact dropping funding rates will have, it would be better for all providers to have a clear idea of the expected cost base of delivering an Apprenticeship. That would enable providers to understand the potential margin available for each framework, building in the ability of providers to budget for investment. Because that’s what we’re here for – to deliver high quality education and to develop the best offer which meets and serves our community’s needs.  And to do that, we need to understand the margins available.

Let's learn from business and think in margin and cost base terms - not just income!

At the moment, there’s a debate raging around income for different Apprenticeship frameworks. In fact, I recently spoke on a panel at an Apprenticeship conference, and one of the questions I faced was ‘what effect does reducing funding rates have on quality?’ In my view that’s the wrong question to be asking. We should really be asking what an acceptable margin is. But we can’t. And we can’t ask that for a couple of key reasons. The first of these is that clearly the concept of margin – or profit – for an educational provider is unacceptable. Why? Well, clearly we aren’t profit making institutions, so raking in huge sums wouldn’t be appropriate. What is appropriate is that we’re able to deliver a high quality education, while also achieving enough income to top slice an acceptable margin that will allow us to cover our fixed overheads and to invest in the organisation’s human and physical resources.

If we think in margin terms, we can reinvest that in our learning environments, such as our recently launched Construction Extension - that'll then help develop even more students!

The second reason we’re unable to answer the question of what margin is acceptable, is that we simply don’t know the answer. Yes, I hear you cry, we do. Well, we should, because hopefully the Institute for Apprenticeships is looking into the cost base of each framework, and then feeding that information into the sector. But they aren’t. Or at least, if they are, they certainly aren’t letting the sector know.

So we have a two pronged problems. We don’t know what the margin is, and worse than that, we can’t even really talk about margin. I think things need to change. Ultimately all education providers have the same goals to enhance and serve their community. We can only do that, if, like business, we examine the opportunity to grow and develop our own offer. And we’ll never be able to do this until we start speaking openly and honestly about the margin we all need to do that. 

So let’s stop just thinking about income, and let’s start demanding action to understand the true cost base of each Apprenticeship framework, so that we can start understanding the potential margins that we can reinvest for them.

Sometimes ‘fast fashion’ is a false economy

Stack products high and sell them cheap. It’s the mantra of many of our profit making companies, and there’s little doubt it’s been successful. In fact, it’s one of the facets that’s led to the decline of independent shops and boutiques on our high streets. Instead, we move in ‘fast fashion’ times, where shops’ supply chains allow them to develop a new product, and have them on the shelf weeks – if not days – later. But while it works for some things, all that pace isn’t right for every product. And so it is with an Apprenticeship – fast, stacked high, sold cheap Apprenticeships don’t work. In fact, I’d go farther than that, and suggest they have the potential to do real damage.

There’s no doubt that there’s a cloud hanging over Apprenticeships right now, with seemingly endless negative statistical releases, and the subsequent gloomy headlines that accompany them. From the employers which have used a meagre 10 per cent of their Apprenticeship levy funds in the first year of it, to the NHS’ decreased Apprenticeship starts, it seems to be a sea of bad news stories for something which should be transformational. In fact, it’s so gloomy in the world of Apprenticeships right now, with a year on year drop in starts of around 28 per cent, that there’s something quite seductive about the idea of just generating the numbers to fight the negative messages in the marketplace. But no matter how much we might like to do so, as a sector we need to resist this pressure to jump on the ‘fast fashion’ bandwagon of knocking out as many Apprenticeships as we can.

As a College Group which has grown significantly over the past eight years we have always been wedded to one key truth; that for us to be successful, we need to serve our communities, adding value to them as a whole. In fact, it’s such an important tenet of what we do, that it’s at the heart of our mission statement. And in order to really add value, and ensure that the communities we serve get maximum benefit, stacking education high, and selling it cheap is the antithesis of what we aspire to.

That philosophy also needs to apply to those employers who are looking for an apprentice too. It’s about making an investment in the future of the company, and by default the community in which they’re based. Ensuring the Apprentice receives their 20 per cent of off the job training time, and employers are paying their fees are key. Why? Because it develops the buy in which is necessary to make sure that the Apprentice is nurtured in their role, and given the tools they need to succeed. And if that Apprentice succeeds because they’ve had the best experience possible, then they’ll add many times that initial cost back into society – and the employer – through the skills they’ve developed. While it’s easy to hark back to a ‘golden era’ of Apprenticeships, lamenting the forgotten principles of tradecraft, it’s important not to do so too often. That’s because we have moved on. However, the core of an Apprenticeship should remain the same; namely that it’s not a numbers game, it’s a skills game – if we “stack ‘em high, and sell ‘em cheap” we do a disservice not just to our Apprentices, but also to society when their impact isn’t as great as it could be. And for educationalists, ensuring that we serve our learners and our communities, and therefore society, should really be at the heart of everything we do. If it isn’t, surely we need to reflect on why that is, and whether we should still be in this sector?

Let’s all give 100 per cent to build our society

What's the purpose of your college? Is it to simply churn out a generation of automatons, equipped with the skills to ply their trade, but not much more? I ask, because of the noisy criticism recently from a number of quarters, regarding the 20 per cent off the job training rule for apprentices.

There’s little doubt the apprentices we train within our Group are growing many more skills as a consequence of the 20 per cent off the job training they receive.

Off the job training gives apprentices the opportunity to learn even more new skills

But perhaps the issue is about something even more important than the huge range of soft skills students pick up.

In fact, I believe it’s about the future prosperity of UK PLC, and can there, really, be a bigger reason to embrace this rule than that?

In training new apprentices, we're growing the skills not just for an individual, or a business, or a community. We are developing those skills for our country’s long term prosperity. What do I mean by that? Well, in order to develop rounded workers, who can remain agile in a busy and dynamic employment market, and therefore help contribute to the wider growth of our society, we need skilled young people who understand the different ways of doing things. They need to be rounded, without organisational indoctrination or bias. They need to understand the different ways of working, and that can only come in one way.

Giving apprentices off the job training opens them up to different experiences

To develop those skills, our apprentices require the checks and balances that come with spending time networking with their peers, learning new ways of doing things and benefitting from the myriad of positive experiences they'll have within their college environment. It’s exactly the skills they build during their time at College which will enable them to progress from their apprenticeship, and, should they want to, move to another organisation. That enables them to become valuable contributors to our economy on a wider level, giving them the tools to navigate our jobs market fluidly, and transition into new roles and businesses more easily.

There’s another reason why apprentices should have that 20 per cent of time away from the workplace. That’s the social aspect of it. It’s a good thing for them to mix with their peers, and to be able to build their networks. And for younger apprentices, it’s nice to give them a forum where they’re able to socialise, and have some fun that’s not workplace related. In my view, it’s that ‘apprentice experience’ which would be lacking if the 20 per cent rule were to be diluted. 

The ability to mix with peers in a College environment ensures apprentices develop their networks, adding to the experience.

And if that were to happen, then you’ll simply push young people – who Government is encouraging to engage in apprenticeships – into other pathways, ultimately limiting our country’s opportunity to grow and flourish in the future.

You can see I am a passionate supporter of the 20 per cent off the job rule for apprentices. As a Group we’re clear about the benefits it brings, and, as a consequence are advocates of it. However, I recognise business sees an apprentice – rightly, in my view – as a real employee, and therefore needs them to add value from day one. I believe the message we all need to be taking to business, and the wider community, is that 20 per cent off the job for that apprentice will keep adding value in perpetuity, and result in a better, more rounded and effective employee over the longer term.

So we come back to the question we began with; what’s the purpose of your college? I know what our Group’s purpose is, and it’s to ensure we nurture the next generation of skilled employees, who can play an active role in contributing to every element of our society, and the communities we serve, rather than just one business. That’s why we must ensure the 20 per cent of off the job training rule remains, and we are active participants in it.