Apprenticeships: MBAs for a few come at a cost to many

Big businesses' spending of levy cash shows that the apprenticeship levy needs reform - and fast, says Julia Belgutay

The apprenticeship levy needs reform now to ensure opportunities are not narrowed further, writes Julia Belgutay

If anyone was still in doubt that apprenticeship reform has driven the system in a very specific direction, today’s investigation on master's-level apprenticeships for senior leaders provides persuasive evidence.

Companies have spent more than £104 million of the money in their apprenticeship levy accounts on level 7 senior leader degree apprenticeships – including MBAs – in less than two and a half years. 

In just the first four months of the 2019-20 academic year, companies spent £41 million of their levy funding on putting managers through these master's apprenticeships – a significant proportion of the overall levy pot.

More on this: Over £100m in levy funds spent on master's for managers

Apprenticeship levy: 'Our apprenticeships system offers fewer opportunities'

News: Leave levy alone, employers urge government 

Apprenticeships upskilling managers

There is nothing wrong in principle with the idea of upskilling managers and building capacity at a senior level, of course. When it comes to strengthening the economy as the UK heads into an uncertain future outside the EU, strong leadership and vision is undoubtedly essential.

This comes, however, against a backdrop of what Kathleen Henehan from the Resolution Foundation only weeks ago called “an alarming fall in apprenticeship starts”.

Since the levy and its associated training rules came into place in April 2017, she says in her analysis of the latest government figures, there has been a sharp fall in the number of apprentices on lower-level programmes, while the number of older (age 25-plus) apprentices on higher education-equivalent programmes has risen.

And, crucially, there were 7,000 fewer starts by 16- to 18-year-olds at level 2, 4,000 fewer starts by 19- to 24-year-olds at level 3, and 1,000 more starts by apprentices aged 25 and older at levels 4 and above.

It is important here to keep in mind that, in my view, the amount of levy money spent directly by levy-paying employers on certain apprenticeship standards is not a direct reflection of the demand for certain kinds – or levels – of apprenticeships. It is much simpler than that: it is only a reflection of what big businesses decide to spend their levy pot on.

This decision will be driven by need within the business, of course, but also by, for example, relationships with providers and the apprenticeships they offer and, importantly, by what is seen as the best – or easiest – way for the company to spend a pot that, if not spend in time, is lost.

No wonder, then, that companies are choosing high-level apprenticeships – such as MBA degree apprenticeships – that at £18,000 per start not only make it easy to spend the levy pot quickly but also bring prestige and recognition to a company’s management.

Limited levy funding

And that is where the problem lies. With a limited levy pot, those opportunities inevitably come at the expense of other opportunities. This is a zero-sum game because businesses that heavily invest in senior staff will have less levy money at their disposal to invest in younger apprentices or those requiring training at lower levels.

But there is also an indirect link: because co-funding for apprenticeships at small and medium-sized enterprises comes from the money raised through the levy, there is a pit of money that gets smaller and smaller as businesses spend their own proportion of the levy. The Association of Employment and Learning Providers has repeatedly called for acknowledgement of the importance of training at level 2, for example – and for more support for SMEs wanting to offer apprenticeships. 

Of course, while there have been calls for levy reform since it was introduced less than three years ago, and those voices are getting louder, there are also many – most recently a group of large employers this morning – who say this is not the time for further change in the system.

Supported by former skills minister Anne Milton, the employers say that only small changes to the system should be made to avoid undoing the progress made. They say employers must be free to spend their levy in line with their strategy and planning.

However, they acknowledge there is a cost to this, calling on the government to commit to a ring-fenced and guaranteed non-levy budget of at least £1.5 billion for SMEs.

The £100 million spent on master's apprenticeships for senior leaders is the most recent evidence of a system that is deeply flawed, and that, while providing opportunities, is not providing enough of those opportunities to people at all levels and of all ages. The system needs reform. And there is little reason to put that change off any longer.

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