The pilot year of the Flexible Workforce Development Fund has not been without controversy. Set up to help employers upskill and reskill their existing workforce, the £10 million fund allows them to partner with colleges on in-work skills training. It is available to organisations across the private, public and third sectors subject to the UK government’s apprenticeship levy.

But business leaders have warned that the fund is too small and too restricted, with employers able to apply for only up to £10,000 worth of training during the pilot. This is despite the fact that the levy - which was introduced in April last year to finance the growth of the apprenticeship system in England, and from which money for the fund is drawn - reportedly raised more than £220 million in Scotland alone in its first year.

The government has announced that the Flexible Workforce Development Fund (FWDF) is to be extended by a further year and the cap is to be raised to £15,000 per employer (see figures, opposite). But now an independent report about the first six months of the pilot has concluded that it has taken “longer than expected to raise awareness of the FWDF and generate interest in demand” - and there is also likely to be serious underspend on the allocated £10 million. Meanwhile, business body the CBI is calling for the fund to be extended beyond colleges to cover other training providers (see box, below).

According to the report, 508 employers were awarded funding from the FWDF between October 2017 and March 2018. Assuming that all were granted the full £10,000, this would mean that only £5,080,000 was spent - although it is likely that further awards were made before the end of the pilot year on 30 June, and the government says there are now over 600 employers involved. Altogether, 1,041 awards were made in the six months covered by the report, meaning a number of employers received more than one.

‘Varied’ progress

The report, commissioned by the Scottish government and carried out by economic and social research consultancy EKOS, says that “part of the thinking for the £10,000 funding cap was that it was anticipated that the fund might be oversubscribed in the first year - this has, however, not materialised”.

It adds: “Progress across the college network (and in some cases within regions) in allocating their 2017-18 FWDF budget is considerably varied ... application deadlines have, however, been extended various times to help to address timing challenges.”

The report also highlights the fact that “a few colleges have almost fully allocated their budget, and the advice to these colleges from [the Scottish Funding Council] has been to continue to invite applications, as there will be potential underspend within the overall 2017-18 FWDF budget to accommodate any new awards”.

Fife College alone engaged 59 employers in six months, according to the report, leading to 265 awards being made. Jan Thomson, director for business development at the college, says that when the fund was launched in September 2017, there was “a real drive internally to make this work, as we quickly recognised the importance of this fund in supporting the local economy”.

She adds: “The initial phase following launch was challenging as we didn’t have a list of eligible employers to target, but we responded quickly to what needed to be done and adapted our approaches accordingly. With strong partnership-working between internal teams and local networks, a clear plan and a drive to succeed, we were able to not only achieve our target but exceed it by over £100,000.”

Thomson says the college is “really pleased that the fund will be administered by colleges again this year, and we’re looking forward to building on our success”.

West College Scotland engaged 49 employers in six months, with 188 awards being made. A spokeswoman says the college saw the fund as “a real opportunity to further engage with regional and national levy-paying employers to understand their needs and to identify specific training requirements to enhance the skills of their employees”.

She adds that because the fund was specific to larger levy-payers, “this opened doors for us to connect with organisations that hadn’t previously engaged with colleges and to showcase the value the sector could bring to them”.

The spokeswoman says: “To date, we have secured around £600,000 worth of training for employers and, although this didn’t exhaust our allocation, we are hopeful of growing this in the second year, particularly with an earlier launch of the fund and the introduction of a national marketing and awareness campaign to ensure eligible employers are aware of the training opportunities being provided as part of the levy.”

Colleges Scotland chief executive Shona Struthers says: “Now that the FWDF has firmly established itself and been extended for year two, our expectation is that even more employers will work with colleges to capitalise on this terrific opportunity.”

She adds: “Employers and colleges will benefit from the Scottish government increasing the fund’s cap by £5,000 to £15,000 and introducing greater flexibility. It is also good news that the Scottish government will shortly publish a marketing toolkit alongside its revised guidelines, as this will help to further raise the fund’s profile.”

A spokesman for the Scottish government says a range of steps are being taken to improve awareness of the FWDF and access to it, in partnership with colleges and wider stakeholders.

When he announced the extension of the fund, minister for business, fair work and skills Jamie Hepburn said: “To help employers with the impact of this unwelcome UK tax on Scottish levy-payers, the extension of our £10 million FWDF will continue to support investment in workforce skills and training opportunities.”