Around £240 million could be freed up in the apprenticeship budget if the government goes ahead with plans to remove level 7 apprenticeships from levy funding, data suggests.
Spending figures on master’s-level apprenticeships were released in response to a parliamentary question in the House of Commons this week.
When the apprenticeship levy launched in 2017-18, just £12 million was spent on the controversial apprenticeships. This figure rocketed to £238 million in 2023-24.
Although spending on level 7 apprenticeships has stagnated for the past three years, it accounts for around 10 percent of the Department for Education’s overall apprenticeship budget.
Ministers are working on plans to remove level 7 apprenticeships from the scope of levy funding because the budget is at breaking point and forecast to soon go overspent, largely due to the rise in higher-level apprenticeships which are the most expensive to deliver.
The cash freed up from defunding level 7s will aid Labour’s plan to expand the apprenticeship levy into a growth and skills levy that funds a wider range of training programmes.
Level 7 apprenticeship starts are dominated by the accountancy or taxation professional and senior leader standards. But other popular programmes include advanced clinical practitioner, solicitor, academic professional, chartered town planner, district nurse and community nurse specialist practitioner.
Supporters of the courses claim most level 7 apprentices are under the age of 25 and hail from the public sector, with the NHS and councils set to be significantly impacted.
Ministers claim that if employers truly value level 7 apprenticeships they will continue to fund the programmes themselves.
The Association of Employers and Learning Providers insists the level 7 axe can be avoided if the £800 million gap between the amount employers pay into the levy and the government-set apprenticeship budget is plugged.
The Office for Budget Responsibility forecasts that £4 billion will be raised in apprenticeship levy receipts by UK companies in 2024-25.
Yet the DfE’s ring-fenced budget to fund apprenticeships in England is £2.73 billion, while the devolved administrations of Scotland, Wales and Northern Ireland receive around £500 million between them.
Ben Rowland, AELP CEO, said: “If the government is going to proceed down this route – and we don’t think it should – it must do so in a way that employers can understand and work with. This means phasing in any changes over time to prevent sudden cliff edges.
“There is a real chance that in its blunt efforts to make employers invest more in training, the government actually achieves the opposite: employers, frustrated by yet another shift in the goalposts, could well turn their back on training, rather than leaning into it.”
The irony is that accountancy and tax occupations should be at the top of the list for automation and the application of AI tools. Yet some of our brightest mathematical minds are funneled into the profession.
In essence, it’s a bunch of numbers operating in a legally defined set of tax rules, perfect for automation. However, that would ultimately lead to transparency of individuals tax affairs. Having a bunch of very bright human calculators bound by confidentiality clauses within that system is really only useful for those benefitting from a lack of transparency.
Personally, I’d prefer public money to be spent getting those brightest minds applying their intellect and pouring their creativity into other pursuits such as medical research, energy systems or climate change solutions.
Typical Labour, penalising those they feel can afford it, without consideration of the bigger picture. My son is one of those apprentices, had the sense to choose that and gain on the job experience rather than incur huge uni fees and still have to train for the role after.
These accountancy and other firms pay huge amounts of levy, if they can’t then have the trainees they want and need they should be relieved of having to pay this tax.
The problem has IMO been caused by the stupidity of suggesting everyone goes to university. There was nothing wrong with polytechnics, they trained for trades and did it brilliantly.
You don’t need a degree to serve in McDonald’s all it does is add to national debt and ensure fat cat salaries for University Chancellors.