Proposed Employer Contributions Collection
January 19, 2010 in The Information Authority Blog by Anna
At its meeting on 30 September 2009, the information authority board considered a change request from the LSC to collect data about the level of employer contributions received by providers towards the cost of Employer Responsive funded provision. The overall purpose of the collection is to inform the Skills Funding Agency and BIS about the types and levels of contributions made by employers.
The board agreed with the secretariat’s recommendation that the ILR was not the most appropriate collection method for this data as the collection should be carried out at provider level rather than individual learner or learning aim level. The secretariat has therefore been working with the LSC to develop an annual provider level return detailing employer contributions.
The proposal is to use the Training Provider Statement web form on the provider gateway to collect high level information at the end of the academic year concurrent with the W12 and W13 ILR submissions. All providers submitting ER returns during the 2010/11 academic year would be required to complete this statement at the end of the year. The method of collection will be a single screen web form comprising the following:
- Total employer financial contribution for the year
- Estimated total value of in kind contributions for equipment, use of facilities, etc.
- Total hours of in kind staff contribution
- Equivalent value of supplying your own staff
- Total value of cross subsidy
- Estimated financial contribution by sector as a percentage
A draft version of the form is available here with further details about the above categories.
We invite you to leave your comments on the thread below by Tuesday 2 February 2010. In particular providers are asked to comment on any difficulties that they can foresee in obtaining the information required and the likely impact of this on the quality of the data returned.
p.s. Apologies for the problems in getting this consultation up – we’re still working out some of the niggles with the new site!
I understand why this is politically important information to gather, but the critical quesiton is whether these figures would come with detailed and complex calculation guidance, and then be subject to audit? If they were, it would no doubt sprout a whole new data collection regime which sits outside the ILR, with plenty of grey areas and added burden. Also, remind me how one calculates contributions in kind??
It’s not they way the data is submitted that needs to be simple, it is they way it is calculated. Ease of calculation and reliability/usefulness will need to be carefully balanced.
A post on behalf of Peter Mudd:
The data requested is not currently collected and to do so would add to the administrative costs in an area where funding per candidate is being reduced. This will add nothing to benefit the candidate and divert resources away from the front end delivery.
If this is to be done, and as a consumer of this information with focus on 16-18, then an ageband split would be wanted for apprenticeships. It is likely DCSF will want to know the employer contributions that go with the funding they are supplying to apprenticeship delivery.
I showed this to our Finance people, this was their response:
“The proposed approach seeks to quantify the ‘in-kind’ contributions made by employers towards training but the spreadsheet appears to be general in the extreme. We would need to understand the different types of contact which we have with students with different employers but it would appear that the costs of providing a room in which they meet, any equipment used or which may be used, the time of any employer training (including a company training officer). Without more precise guidance the scope for ‘creative interpretation’ appears to be quite open.
Even if the scope is understood (i.e. what is included) the same creative interpretation may be applied to the calculations (i.e. how the costing is done). For example does the “cost of and equivalent amount of time from your own staff” include management and overhead costs or simply direct delivery costs?
I am not sure that providers would be readily able to identify any cross-subsidy from full-cost or adult responsive delivery without similarly detailed prescriptive guidance.”
On the positive side all providers must be grateful that we have moved away from the idea that we could collect information about employer contributions at learner level. The form is at least simple although to calculate the figures would be too complex to even contemplate. So what we are left with is some sort of whole company, top line estimate. I have always argued that it is difficult to see where the added value is. The actual funding is reduced to 50% and the quality of delivery is monitored by inspection, MLPs and Framework for Excellence. I cannot help feeling that the estimation of employer contributions will be so variable that this will not be helpful. Worst case is that providers (whatever the SFA says) will assume the data will be audited and start to collect huge amounts of unecessary data. I have always favoured a ’selected sample’ approach where specific case studies are reviewed to ‘test’ the concepts of employer contributions. I understand the political drive to measure employer contributions and if this is the chosen route then the guidance must be clear and it must be clear that it is not contractual or auditable data.
I would suggest actually collecting the data in the standard ILR return as a simple cash figure would be far simpler, particular where provider’s has large volumes of employer engagement.
To create a separate data collection which will be open to various interpretations and data origins is just adding to the so called data burden.
On top of this there is the audit and monitoring complications which a separate return may make.
I think it’s important to consider why we are being asked for this information… some providers invoice employers for the maximum amount of employer contribution whereas others request nothing more than “in kind” contributions such as use of employer staff and resources. If the results of the proposed employer contributions survey show that a majority of providers do not seek full compensation from employers, either in kind or by cash invoice, then that may possibly provide justification for further funding cuts on the grounds that if we aren’t seeking full employer contribution then perhaps we are more than happy with the level of funding we receive direct from the LSC.
It is therefore in the best interests of providers to be seen to be claiming the maximum employer contribution allowable.
Further thought… the results of the survey will be correlated against the sector subject areas to see whether or not certain sectors demonstrate a greater need for employer contribution – and therefore I guess the aim is provide an opportunty to fine tune the funding levels at sector subject area level.
But I don’t think that it naturally follows that if a certain sector doesn’t appear to need much employer contribution then that should be a green light to cut funding to providers in that sector. I would argue that certain sectors are less likely to willingly pay providers and surely that doesn’t justify a cut in the providers direct funding – more the opposite? Where it is hard to collect the employer contribution then surely the provider should be compensated – not penalised.
This would require providers to have fairly robust systems in place to enable them to gather this kind of info throughout the year to allow them to complete the annual return. This would add to the data burden and would require resource and processes setting in place to gather this information.
I think this could be open to real abuse as a Provider could submit anything if they do not have to substantiate this in anyway by learner or employer. Is there some plan for follow up or testing of the validity of the return?
I think there are pros and cons to the use of the ILR rather than a separate monitoring schedule – but would echo the thoughts above whereby any additional monitoring such as this would need extremely clear guidance to support it – especially with a subject so open to interpretation such as in-kind contributions from employers.
I also welcome Alan Taws’ comments above in relation to potential differences which will be found across different sectors.
Working, as I do, within the Hair & Beauty sector, whose employer base comprises 87% SME sized employers, there is likely to be a large number of these employers for whom a contribution (whether cash or in-kind – which with small numbers of employees becomes increasingly significant) to training costs could become a barrier to training. I certainly would echo Alan’s views above that the level of historical employer contributions by sector should not be the only driver behind funding allocation decisions, and as with all such measures and procedures, while things need to be kept as simple and straightforward as possible; a one-size fits all approach to applying such measures is never likely to be the best option.
I echo mferdinando’s comments absolutely.
I also work in the Hair and Beauty sector and our employer base is similar. Mention ‘Employer Contribution’ and many prospective employers, considering offering apprenticeships, would be very wary. In the economic climate at present, many of the employers we work with feel that actually offering an apprenticeship to a young person is contribution enough!
The proposed approach could seem a little ambiguous and I wonder why.
Too much! No more! Please!
We suggest only actual fees collected should be reported and this should be through the ILR.
It would be extremely difficult and excessively burdensome to put in place a regime which would ensure “in kind” contributions were reported accurately, consistently and reliably across the sector.
I agree that monetary contributions can be easily reported in the ILR as we do with LR. The ‘in kind’ element however would mean we have to introduce new processes to ensure we collect relevant information. Why not just introduce a new code to A13 to indicate fee waived / adjusted due employer participation. We already provide this information with every enrolment / ILR form anyway.
I also believe that in time this information will be of use to colleges as we further develop our costing models.
If this needs to happen please introduce this in a way so as not to increase the data burden.
I too am concerned by ‘in kind’, this will be and additional cost/staffing burden to collect and validate. It will have to be validated as we the providers will be responsible at audit. If this gets imposed on us it will need to be supported by clear, unambiguous rules which are issued well before the beginning of the 2010/11 academic year. This would allow providers to include it in the negotiations. I also suspect that would have a negative impact on the fees we already collects as employers will seek to minimise their contribution by making outrageous claims about in kind costs.
‘Cross subsidy’ would also be burdensome to deal with. Again we need some real definition not the ‘woolly’ statement on the exemplar spreadsheet. If we were expected to look at provision cohort by cohort to look at which funding element makes it viable then we would spend as much time ‘calculating’ as we would teaching!
I echo the thoughts of Peter Mudd posted by Anna in as much as the data requested is not currently collected and to do so would add to the administrative costs in an area where funding per candidate is being reduced. This will add nothing to benefit the candidate and divert resources away from the front end delivery.
In my opinion if this is to be an accurate return lets do it through the ILR. What real use can an estimate be to the LSC? If i estimate that College A will get £100k Employer contributions and they only get £10k what happens? if nothing then it’s off no use so let’s not bother. If something happens and we are being judged on the accuracy of our estimates, then we have to start returning an accurate figure and take the admin burden that entails.
Thank you to all who have contributed to the discussion so far.
Colleagues in the LSC have been following the discussion and have provided responses to some of the key points raised as follows:
1. The burden on providers to collect additional data
The Government currently contributes either in full or in part towards the cost of adult training, Where training is funded in part by the Government, the remaining proportion of the cost of the course is intended to be met by funding from either employers or individual learners themselves. Since 2004, the assumed co-funded proportion has been increasing, reaching 50% in the year 2010/11. Currently the LSC captures data on learner financial contributions via field A13 of the ILR, but does not have a mechanism to capture employer financial or other contributions. Originally it was proposed to open this field to Employer responsive provision to capture details on contributions, but research clearly demonstrates that employer contributions are not just financial and as such this field, in its own right, would not be representative of employer contributions.
External research suggested that, in the first instance, any approach to quantify the level of employer contributions should focus on categories where at least 50% of providers believed that employers were making a contribution (i.e. course fees, provision of teaching and training facilities. provision of equipment/consumables and the delivery of learning). Whilst this would under-estimate the total level of contribution, it would ensure some simplification of the process and reduce the total amount of bureaucracy involved. The LSC does not wish to create additional bureaucracy or additional burdens upon providers but is mindful of the requirement to evidence a response to government policy. The use of the TPS, it is felt, offers the opportunity to pilot data recording systems that are integrated into current practices, so as to avoid creating new systems. The system also enables the providers to record contributions attached to packages of learning at an employer level and/or provider level, one of the fundamental reasons for not recording on an individual basis via the ILR.
2. Funding implications – will the collection of this data ultimately lead to funding cuts? And as this information is being collected by sector, could funding be reduced for some sectors only?
There is absolutely no intention to gather this information in order to inflict funding cuts. The LSC is aware of the difficulties providers are facing in meeting the government targets for contributions from learners, as identified via data collected in the ILR, and have reported these challenges to ministers. This has led to Ministerial and Departmental backing and support to a range of training and toolkits for providers to support the whole arena of income generation. Anecdotal evidence suggests the same scenario across employer responsive provision but the LSC is powerless to challenge the contributions targets without the evidence base. The use of the TPS will begin to build up a database of employer responsive based evidence on contributions that can be used to help inform the development of future training and support as well as providing an evidence base to challenge or support future policies on income generation.
Another consideration is that, with the absence of evidence of employer contributions there may be the risk that the government will view the lack of contributions as evidence that the existing rates paid are too high, hence the importance of beginning to understand the type and level of contributions, as a mechanism to challenge or inform any funding decisions.
3. Audit – will the information collected be audited?
The provider will be required to hold evidence to support the amount claimed on the TPS, including calculations (ILR Funding Guidance and Audit Guidance for Providers paragraph 29 and 30). It is not anticipated at this stage that the evidence will be audited, however, it is in the interests of providers and the self-regulation agenda to begin to collect this data as understanding the level and type of contributions across the sectors is valuable market information and a tool to challenge government policy and decisions on income generation.
4. Calculation ‘open to creativity’ – variable results will lead to inaccurate data
The use of the system does allow for variable calculations of the value of in kind contributions, which does place a risk in terms of the accuracy of the data. However, analysis of the data once it is submitted will enable the LSC to begin understand the types and level of contributions across the sectors and types of providers, which could then be drilled down into greater detail should patterns or trends emerge. The LSC could produce set rates for the value of particular types of staff, room size, equipment etc but is conscious the providers, all the way through this process, have challenged a the more detailed and rigid approach for fear of increased levels of bureaucracy and or administration. If providers link this into their own accounting or financial processes rather than adhering to strict set rates etc then the flexibility will be maximised and administration minimised.
Posted on behalf of Jacqui Longley, Senior Funding Policy Development Manager with the Learning and Skills Council
I think it is clearly worth noting the LSC research from as recently as August 2009 “Investigation into Employer Contributions within the Employer Responsive Funding Model”.
This said: “Over 80% of providers felt that course fee information would be best collected at learner or course level with a small number preferring data to be collected at provider or employer level. The ILR was the preferred method of data collection as it did not create any additional burdens for the provider. ”
http://www.lsc.gov.uk/publications/latestdocuments/Detail.htm?id=ff803e3b-ba56-4994-87cc-9590018f7d1e