Training for public sector workforces such as the NHS and local councils will be “devastated” if the government imposes a blanket ban on funding level 7 apprenticeships through the levy, ministers have been warned.
University finances also face being plunged deeper into the red by the move, experts fear, with almost 100 of the higher education providers currently generating revenue from the programmes.
The government has been urged not to “throw the baby out with the bath water” by former skills minister Robert Halfon, who expressed fears the policy could “set a precedent” and lead to the removal of degree apprenticeships at level 6 in the future.
But other sector leaders have praised the decision as it removes so-called “deadweight” costs – paying for training that would have happened anyway in the absence of the levy.
Keir the contradictor
Prime minister Sir Keir Starmer was accused of a “contradiction in terms” this week after he told the Labour party conference that “we’ve got to give businesses more flexibility to adapt to real training needs” before using the Department for Education to announce restrictions on level 7 apprenticeships.
The move is part of the government’s attempts to “rebalance funding in our training system back to young people” amid soaring levels of people over the age of 25 being put onto apprenticeships.
So far, the DfE has only said: “This will involve businesses funding more of their level 7 apprenticeships – equivalent to a master’s degree and often accessed by older or already well qualified employees – outside of the levy.”
New quango Skills England, which hopes to be fully up and running from April 1, 2025, will be tasked with deciding which level 7 apprenticeships get the axe, FE Week understands.
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.
Employers in both the private and public sector, as well as training providers and universities that deliver their apprenticeship training, are concerned about the possible implications.
Crystal Oldman, chief executive of the Queen’s Nursing Institute, said: “If level 7 apprenticeships are to be removed from district nursing – and other post qualifying advanced practice roles – this will be devastating for the nursing workforce and would seem to go against the government policy to have more care delivered in peoples’ homes and communities.”
Dan Lally, group director of business, enterprise, skills and employability at Sheffield Hallam University, said level 7 restrictions will “disproportionately impact on public services”.
He added: “We are meeting vital skill gaps in disciplines such as advanced clinical practitioner and town planning. I just don’t recognise the narrative of ‘already well paid, well qualified employees’.
“These are NHS workers, civil servants and local authority employees. A high number of our level 7 apprentices have prior attainment below level 4 and come from the areas of highest deprivation.”
Ministers celebrated the development of a level 7 apprenticeship for doctors just two years ago, with the first apprentices starting on this programme this month.
Professor John Alcolado, a medical school adviser who sat on the national implementation group for the apprenticeship, said the medical schools that have “worked hard” with NHS trusts have been “a bit blind-sided” by this week’s announcement.
FE Week understands that civil servants will urge Skills England to keep some level 7 apprenticeships in scope of levy funding, namely those for healthcare professionals, but the decision ultimately lies with the new arm’s-length body.
The government told FE Week that the Department for Health and Social Care and NHS England will “work closely with Skills England to ensure that the NHS has access to the skilled workforce patients need”.
So why remove level 7?
The apprenticeship levy was launched in 2017 and forces employers with wage bills over £3 million to pay into the levy at a rate of 0.5 per cent per year.
England’s current apprenticeship budget is at breaking point and is forecast soon to be overspent, largely due to the rise in higher level apprenticeships which are the most expensive to deliver.
FE Week previously revealed that combined spending on level 6 and 7 apprenticeships soared from £44 million in 2017/18 to £506 million in 2021/22 – hitting £1.325 billion in total over that period.
Figures for more recent years are not available, but the programmes now account for over a fifth of England’s annual apprenticeship budget.
Spending on level 7 apprenticeships alone rose from £11 million in 2017/18 to £216 million in 2021/22 – totalling £588 million over that period.
Meanwhile, spending on level 2 apprenticeships dropped by a third over that period, from £622 million to £421 million.
Labour is currently turning the apprenticeship levy into a “growth and skills levy”, which will allow employers to spend some of their contributions on some yet-to-be-decided non-apprenticeship training. The government therefore needs to find room in the current budget, assuming chancellor Rachel Reeves does not add significant investment to it anytime soon.
Government officials have been weighing up restrictions by apprenticeship level and age for at least a year, as revealed by FE Week in November 2023.
Level 7 axe is ‘avoidable’
Tom Richmond, a former government adviser, said removing level 7 from the levy was “always one of the easiest ways to release more funding for younger learners and lower-level apprenticeships”, but added there was likely to be a “furious reaction from many employers who have been told for the last nine years it was their money to spend”.
Richmond said he has “no time for fake apprenticeships such as the level 7 senior leader programme and the accountancy/taxation professional, which should never have been approved” but recognised the policy could have “unintended consequences for schools, charities, the NHS etc who use the apprenticeships to develop staff”.
Association of Colleges chief executive David Hughes said that, where employers “truly value” those level 7 apprenticeships, then they should “invest their own money in them, showing that they provide a good return on investment”.
The Association of Employers and Learning Providers insisted the level 7 axe could have been avoided if the £800 million gap between the amount taken in by the apprenticeship levy and the actual programme budget was plugged.
The Office for Budget Responsibilities 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 £2.729 billion, while the devolved administrations of Scotland, Wales and Northern Ireland receive around £500 million between them.
‘The decision is retrograde’
Most concern over level 7 apprenticeships stems from the senior leader programme that initially included an MBA until ministers stepped in and removed this component in 2020.
Mandy Crawford-Lee, chief executive of the University Vocational Awards Council (UVAC), suspects this week’s announcement “is reflective of the long-standing rhetoric that has been critical of management apprenticeships”.
She told FE Week: “The caricature of the investment banker, or well-paid FTSE executive using levy funds to pay for an MBA has, even very recently, featured in the debate on apprenticeships despite the removal of the master’s degree from funding in 2020. The reality has, however, always been different.”
Crawford-Lee said that around 60 per cent of senior leader apprenticeships are undertaken in the public sector, with the NHS being the biggest investor. Schools also widely make use of the course.
She added: “The decision is retrograde, made even more frustrating by some commentators who support and perpetuate a variety of myths and opinions on the grounds that level 7 apprenticeships are not ‘proper’ apprenticeships.
“Consider what that might mean to those apprentices who have completed their training in advanced clinical practice, clinical pharmacology, town planning, clinical psychology or professional economists.”
More than 100 training providers and colleges, as well as almost 100 universities, currently deliver level 7 apprenticeships.
Kaplan Financial is the highest-earning training provider in the apprenticeship levy thanks to its delivery of the accountancy or taxation professional course to employers including Microsoft, Cisco and HSBC. It raked in over £45 million from big levy-paying businesses in 2021/22, according to latest available data.
Kathy Walton, CEO of Kaplan Financial, said restricting funding for higher level apprenticeships is “extremely disappointing and counter-intuitive”, adding that this is a “blunt instrument that will have unintended consequences for the economy and for young people”.
She claimed that most level 7 apprentices are “under 25 years old and come from many different backgrounds, some progressing through lower-level apprenticeships to reach the point of qualification”.
Several other large level 7 apprenticeship providers, including Cranfield University, First Intuition, and the Devon and Cornwall Training Providers Network that represents employers both large and small in this space, echoed Kaplan’s concern.
The Chartered Management Institute (CMI) is another organisation that has seen turnover soar thanks to management apprenticeships including the level 7 senior leader, for which the company does end-point assessment.
Ann Francke, CEO of the CMI, said: “We are concerned that this decision may negatively impact three of the five government missions – grow the economy, reform the public sector and provide opportunity for all.”
Halfon, who was skills minister until the general election in July, told FE Week he fears that the new government is using a “sledgehammer to crack a nut”.
He said he was concerned about universities considering recent reports about their existing financial struggles including restrictions on international students.
“Are they throwing the baby out with the bathwater?” Halfon asked. “You’ve got some incredibly prestigious level 7 apprenticeships that people put everything into, from architecture down to nursing. Are they going to destroy the degree apprenticeship model by going for level 6 next? That’s my worry.”
Rather than “mess with the levy”, he said the government should introduce a skills tax credit, similar to research and development credits.
I’m not sure they’ve said it’s an outright ban on Level 7, but restrictions.
Seems sensible to me to keep some of the standards that positively impact society.
I’d rather have our brightest minds in healthcare, defence, energy, AI etc than tied up in accountancy to spend their careers being unwitting enablers of widening wealth divides by helping clients exploit loopholes in the tax code to avoid tax. (all perfectly legally of course)
(for info, the tax code was 5,000 pages long in 1995, 10,000 pages by 2010 and is now over 20,000 pages – not entirely dissimilar to the DfE simplification of the funding rules!)
“60 per cent of senior leader apprenticeships are undertaken in the public sector, with the NHS being the biggest investor apparently.” If I am not mistaken this is that same organisation that is “broken”!
In an enormously important organisation that is in crisis, shouldn’t the managers be devoting every minute of their well paid “golden pension” accompanied time to fixing it? Apparently not! Lets enrol large numbers of them onto degree level apprenticeships where we will enforce with very detailed rules that at least 20% of their time should be spent away from the day to day job!
A good idea? Was the whole world wrong prior to apprenticeship reform where practice was they were expected to do it in their own time and either pay for it themselves or get a student loan? There were even some real good examples of this approach where employers helped them out with some of the fee and even gave time off work to attend the odd weekend school or for the exam !
We don’t want to return to this shocking position says the University voice in my head! We have managed to nick a good portion of the apprenticeship budget to keep us in the style we have become accustomed to. Shut up you fool somebody might hear you!!