£40m fund launched to fix ‘market failures’ in degree apprenticeships

Unlike previous funds, providers new to degree apprenticeships can bid for a slice

Unlike previous funds, providers new to degree apprenticeships can bid for a slice

28 Sep 2023, 13:29

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Bidding is open for a £40 million fund to address “market failures” in the government’s flagship degree apprenticeship programme.

The Office for Students is seeking projects that will improve take-up of level 6 degree apprenticeships and “address equality of opportunity”.

Ministers were urged to get a grip on access to degree apprenticeships last year as research by the social mobility charity the Sutton Trust found the “middle-class grab” on opportunities was getting worse.

This comes on top of £8 million that has already been allocated to over 100 existing degree apprenticeship providers this year to develop their provision.

To be eligible for the new fund, providers must be registered with the Office for Students under their approved (fee cap) category, but they don’t have to be currently delivering degree apprenticeships. 

Robert Halfon, minister for skills, apprenticeships and higher education, said: “Expanding degree apprenticeships is crucial if we are to build a skills and apprenticeships nation that is fit for the future.

“This extra £40 million will allow even more people to benefit, and I am delighted that the OfS has asked universities ands colleges to show how their projects will create more opportunities for people from disadvantaged backgrounds as part of their bids for this funding.”

Bids for the first wave of funding, for projects running up to July 2024, open today and close on November 20, 2023.

Addressing ‘market failures’

According to OfS analysis, of the 343 higher education providers registered in their approved (fee cap) category, 240 were also registered on the apprenticeship provider and assessment register (APAR), formerly known as the register of apprenticeship training providers.

Of the 240, just 99 providers had recorded any degree apprenticeship starts, which the regulator describes as a “market failure”.

“We consider that the relatively small proportion of registered providers currently delivering degree apprenticeship starts represents a market failure. We wish to address this by using our funding to incentivise providers to begin delivery of degree apprenticeships,” OfS funding guidance said.

And although the number of degree apprentices doubled from 6,920 in 2019/20 to 13,510 in 2020/21, the OfS reports that most of that growth was seen in just 24 providers. 

This “uneven and slow” growth was also described as “market failure”.

Fixing ‘middle-class grab’

DfE ministers have consistently lauded the degree apprenticeships programme in recent years, but it has been criticised for providing opportunities for already well-qualified people. 

The Sutton Trust reported in December that degree apprenticeships were more socially exclusive than the traditional university route. They found that only 5 per cent of those starting a degree apprenticeship in 2020/21 were from lower-income areas, compared with 6.7 per cent of those going to university.

The OfS said it wants to fund projects that target students who are least likely to access higher education. 

Using their associations between characteristics of students (ABCS) measure, the OfS found that 50 per cent of degree apprentices that started in 2021/22 were in the top two quintiles of people who are more likely to access higher education. 

Projects should target students that are under 21, have a disability, are from under-represented ethnic groups and come from the two lowest quintiles by the index of multiple deprivation. 

Currently, just 30 per cent of degree apprentices are under 21 years old, 12 per cent recorded a disability and 86 per cent are from a white ethnic background.

Waves and strands

To be in with a chance of winning funding, providers have to bid under one of two strands in three funding waves.

Strand one of the fund is for providers that are already delivering level 6 degree apprenticeships but with low take-up. Projects in this strand should increase starts on apprenticeship standards already being delivered and begin delivery of new standards.

Strand two is for providers that are new to delivering level 6 degree apprenticeships to “expand provision of apprenticeship standards with currently lower uptake among providers”.

Across both strands, the OfS expect projects to “increase equality of opportunity” in degree apprenticeships.

Eligible providers can compete for funding in three waves. Wave one, for projects that run until July 2024, and wave two, for projects that run until July 2025, open for bids today. Wave three will open in May 2024.

A total of £16 million is available in wave one and £24 million is available for waves two and three.

Providers have until November 20 to bid into wave one and December 19 for wave two.

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  1. I think the term ‘middle class grab’ is a little misleading.

    It infers that individuals are responsible and gobbling up the opportunities, so other more disadvantaged individuals get shut out.

    But the data shows that a large proportion of degree level apprenticeships are by existing staff members, who tend to be older, in more senior roles and because of that, less diverse.

    I very much doubt that those staff were pressing their employees to do an apprenticeship, it’s more likely to be businesses recouping their levy spend in the easiest way possible, maybe even dressing it up as a benefit in lieu of wage increases.

    Perhaps less a case of ‘market failure’ and more of ‘policy shortsightedness’.