Thank you, convener.
Developing the skills and employability of Scotland’s workforce is one of the Scottish Government’s main priorities. Young people in particular have found it difficult to find jobs since the economic downturn, and the Government’s target of providing 25,000 new apprenticeship places each year is intended in part to help young people find employment opportunities. Apprenticeships also have an important role in developing the workforce skills that are needed for economic growth.
Skills Development Scotland administers modern apprenticeships on behalf of the Scottish Government, and my report focuses on SDS’s role and the £75 million-worth of funding that it distributes annually to training providers to train and assess apprentices. The report assesses whether modern apprenticeships provide value for money by examining apprenticeship costs and performance information. It also looks at how well modern apprenticeships are managed and whether there is scope to make improvements and efficiencies.
I will outline our findings in four areas. First, almost 26,000 people started a modern apprenticeship in 2012-13, which is more than double the number in 2008-09. The increase follows the introduction in 2012 of a target of 25,000 new apprentices, which Skills Development Scotland has met in each of the past two years. That is a significant achievement given the uncertainty of employer demand in challenging economic circumstances.
Within the overall target of 25,000, the Scottish Government has a number of priorities. It requires SDS to maximise the number of apprenticeships for 16 to 19-year-olds in key sectors of the economy and those with qualifications at level 3 and above. The Government also requires SDS to continue to increase the number of people who complete their apprenticeship.
SDS is performing well against those priorities, although it has reported some challenges. For example, providing higher numbers of apprenticeships for 16 to 19-year-olds and apprenticeships at higher levels is difficult. Higher levels of apprenticeships are often more appropriate for individuals with more work experience, who tend to be older employees. Prioritising apprenticeships in key sectors, and in key economic growth sectors in particular, is challenging because apprenticeships are not as well established in those sectors as they are in more traditional sectors. My report recommends that SDS should target employers in key economic growth sectors to raise their awareness of apprenticeships and to encourage them to take on apprentices.
Secondly, spending on apprenticeships increased in real terms between 2008-09 and 2012-13 from approximately £60 million to £75 million. Around 25 per cent of annual spending now goes on new apprentices, and 75 per cent is spent on apprentices in year 2 or later of their training. The Government’s focus on higher levels of apprenticeships, which take longer to complete and are more expensive, may create a risk to the financial sustainability of funding 25,000 new apprenticeships each year within current budget limits. That means that SDS needs to monitor closely the funding that is required for higher levels of apprenticeships, and for those in key sectors, to assess affordability. That will be particularly important if the Government increases SDS’s annual target for new apprenticeships, as recommended by the commission for developing Scotland’s young workforce.
Thirdly, the Government’s overall aim for modern apprenticeships is economic development. Its existing performance measures for apprenticeships do not focus on long-term outcomes such as sustainable employment or increased earnings, which means that it is difficult to measure apprenticeships’ contribution to national outcomes or assess whether they are achieving the Government’s aim.
My report therefore recommends that more specific long-term aims and objectives should be developed for apprenticeships, along with better outcome measures. That would make it possible to assess the extent to which modern apprenticeships provide value for money. We also recommend that the Government should monitor the long-term benefits of apprenticeships, which would allow funding to be directed to those that offer the best value to individuals, employers and the economy.
Finally, part 3 of my report focuses on SDS’s administration of apprenticeships, including quality assurance arrangements and how SDS contracts with training providers to deliver apprenticeship training. We think that SDS manages the administration well, taking into account the complexities that are involved, including the number of organisations that are involved in the design and delivery of apprenticeships. However, I make a number of recommendations to help improve administration, and I focus in particular on the need for quality assurance arrangements to be clarified and formalised in order to help identify any instances of poor-quality training and to share good practice among training providers.
My colleagues and I are, as always, happy to answer the committee’s questions.