Exclusive:Fears rise over future of £10million SNP fund used to provide 'invaluable' training to thousands of workers

College chiefs demand clarity amid ‘late’ distribution of vital skills investment

Fears are growing over the future of a £10million Scottish Government fund used by businesses to provide vital training to workers.

College chiefs have demanded “clarity” from ministers amid “escalating concern” about the Flexible Workforce Development Fund (FWDF).

Business leaders have also urged the Government to think of the “long term consequences” before any decision is taken to withdraw or cut the “invaluable support”.

Worker using a laptop

Since its introduction in 2017, the fund has enabled firms which pay the Apprenticeship Levy, as well as small and medium enterprises, to address skills gaps by utilising training at Scottish colleges, the Open University and independent providers.

Hailed as “vital”, the scheme has benefited thousands of businesses and tens of thousands of employees over the last five years.

However, there is still no sign of funding allocations for 2023/24, which colleges were expecting to be distributed in August.

In a letter to Holyrood’s education committee, Education Secretary Jenny Gilruth said last week that “no decision has yet been reached” on the fund for this year, while highlighting that “budget negotiations have been extremely challenging this year”.

A spokesperson for Colleges Scotland told The Scotsman: “There should be more clarity over the continued provision of the Flexible Workforce Development Fund (FWDF) for the current academic year 2023/24, and future provision from academic year 2024/25 onwards.

"There is escalating concern regarding the continued funding of FWDF, as allocations - and we are now in November - haven’t been made to colleges yet.

“The FWDF funding stream has significantly enhanced the way colleges engage with their business communities on a local and regional level – strengthening links to small and medium-sized enterprises (SMEs), and providing those businesses with training development opportunities to support inclusive economic growth.

"The majority of colleges have lengthy waiting lists from employers to access training opportunities facilitated by FWDF – demonstrating both the benefits and necessity of the FWDF to both SMEs and the college sector.”

The Scottish Government has previously said that the FWDF plays a “crucial role” in Scotland’s National Strategy for Economic Transformation.

Under the scheme, Apprenticeship Levy-paying organisations can access upskilling support to the value of £15,000, and non-levy paying SMEs can get up to £5,000.

An independent evaluation of the fund, published in January this year, found it was “universally considered” by stakeholders to be a “much needed and valued intervention”, leading to a “clear and strong continuing rationale for the fund”.

Around 1,350 unique businesses which pay the Apprenticeship Levy had been supported by 2021, with the number of workers involved increasing from around 9,000 employees in 2017/18 to about 27,000 in 2020/21.

In terms of SMEs, more than 900 firms and more than 2,000 staff had benefitted in the same period.

Scottish Conservative education spokesman Liam Kerr said: “This essential funding must not become another example of something important stripped away by the SNP.

“Loss of funding to the Flexible Workforce Development will have severely negative impacts on apprenticeships and businesses.

“It would also show that claims by the SNP that they are serious about parity of esteem, apprenticeships and training, are insincere.”

He added: "We are ambitious for our country with a focus on highly skilled and well-paid jobs for all. The SNP should show a similar level of ambition, rather than removing vital funds in this area.”

The FWDF involved a total of £10m of funding in the first three years, before doubling to £20m in 2020/21.

In 2022/23, there was almost £10m available for colleges as part of the scheme, as well as £500,000 for the Open University in Scotland and £1m for independent training providers.

It is understood that in all previous years the funding was distributed in August, except last year, when colleges were left in limbo while being forced to wait until January.

A further cut to the FWDF would deliver a fresh blow to colleges, many of which are already planning controversial job cuts while staff strike over pay.

The Scotsman revealed new figures last month which showed funding for colleges had been slashed by more than 10 per cent in just two years.

Liz Cameron CBE, chief executive of Scottish Chambers of Commerce, said it was understood that the Government faced difficult budget decisions, but she urged ministers to ensure investment in skills is not “sacrificed” at a time when growth is being stifled by ongoing challenges faced by firms seeking to access labour and skills.

Colin Borland, director of devolved nations at the Federation of Small Businesses, said the FWDF had been an “invaluable resource” and that it was “essential” that ministers consider the long term consequences of losing such programmes, beyond any short term savings.

Mr Kerr, a north-east MSP, used parliamentary questions to press the Government on the future of the FWDF last week.

In response, Graeme Dey, the further and higher education minister, said: “Budget discussions are still ongoing. We are working hard to confirm the final position for FWDF in 2023/24 as quickly as possible.

"An announcement will be made once a final decision has been reached.”

The Scottish Government said the FWDF does not fund apprenticeships but was designed to provide employers across Scotland with flexible training opportunities to upskill their workforce

A spokesperson said: “The Scottish Government fully appreciates the importance of the Flexible Workforce Development Fund (FWDF) for colleges and businesses.

"We are working hard to ensure we can communicate the final FWDF position to colleges in the coming weeks.”