Ofsted annual report warns apprenticeship levy being spent on graduate scheme rebadging

Amanda Spielman has amplified Ofsted’s concern that too much apprenticeship levy funding is being spent on higher levels, which is squeezing out the recruitment of young people onto lower level programmes.

The chief inspector (pictured) raised the issue in her second annual report, published this morning.

“We are concerned that in many cases, levy money is not being spent in the intended way,” she wrote.

This might meet the rules of the levy policy, but it falls well short of its spirit

“We have seen examples where existing graduate schemes are in essence being rebadged as apprenticeships. This might meet the rules of the levy policy, but it falls well short of its spirit.

“We hope the government will give greater thought as to how levy money can be better directed at addressing skills shortages.”

It follows yesterday’s FE Week exclusive which revealed the Institute for Apprenticeships is expecting an imminent levy over-spend, understood to be the result of higher per-start funding than first predicted, largely driven by the sharp rise in management apprenticeships with high prices.

Ms Spielman said today that along with the “sudden expansion in the number of providers offering apprenticeships”, the inspectorates “continues to be concerned about access to apprenticeships for the third of students who leave school without a full level 2”.

The number of under 19s starting an apprenticeship has been in decline for the last two years, falling from 78,500 last year to 62,000 this year alone.

“In contrast, the number of learners starting a higher apprenticeship has been growing year-on-year since 2011/12, increasing by around 10,000 apprentices a year for the past four years,” the chief inspector said.

She added that while Ofsted does “welcome” more apprenticeships at higher levels, “particularly when there is clear progression in an occupation from level 2 to degree level”, it will not address skills shortages in England if they are done at the expense of getting young people onto the programmes.

 

Ms Spielman’s fresh criticism follows her annual report from last year which first raised the issue.

“Most apprenticeships being delivered in 2016/17 were at levels 2 and 3, yet over a third of the standards ready for delivery were at level 4 and above,” it said.

“If this trend continues, there will not be enough approved standards at levels 2 and 3. This could have a detrimental impact on the recruitment of 16- to 18-year-olds into apprenticeships.”

FE Week was first to warn of the ‘unstoppable rise’ of management apprenticeships in 2016, and last month reported that just 10 management standards were responsible for a fifth of all apprenticeship starts on standards, according to provisional data for 2017/18.

The proportion has grown over the years, from nine per cent in 2015/16 and 15 per cent in 2016/17.

It looks like as a result, the apprenticeships budget for England is set to be overspent by £0.5 billion this year, rising to £1.5 billion during 2021/22, according to figures from the IfA.

 

Speaking to FE Week at this morning’s annual report launch, the chief executive of the Association of Colleges, echoed Ms Spielman’s concerns.

“There’s some really interesting stuff about apprenticeships and how the levy seems to be being used a lot for people who are already in work, in management positions, for higher level and degree apprenticeships,” he said.

“I’m really worried about that – as Ofsted is – because we really must make sure apprenticeships are particularly for young people entering the labour market.

“That’s what the spirit is all about, rather than giving people who are already privileged in the system more skills that probably would have been funded differently by employers in the past.”

And Mark Dawe, chief executive of the Association of Employment and Learning Providers, said he’s a “big supporter” of apprenticeships at all levels but “the level 2 and 3s are the most important and that is where government money should be focused”.

 

FE Week asked the Department for Education if it shared the same concerns as the chief inspector, Mr Dawe and Mr Hughes, but it would not comment directly on this.

Instead, a spokesperson said: “Our apprenticeship reforms, the largest government has ever made, have put control back into the hands of employers so they will gain the skilled workforce they need to compete globally.

“By working with employers to develop new, higher quality standards we can ensure that young people are getting the training they need to get a great job while businesses can be confident they are getting the skilled employees they want.”