Apprenticeship funding is being wasted on MBAs – Starmer’s new plan could finally change that

25 September 2024, 08:03

By Tom Richmond

If I asked you to describe a good-quality apprenticeship, you would probably paint a picture of a young person in a workshop learning a skilled trade under the supervision of an expert teacher.

What you would almost certainly not describe is a highly paid senior executive at a multi-billion-dollar global corporation doing an MBA. Remarkably, over the last seven years, we have seen a lot less of the former and a lot more of the latter.

The apprenticeship levy, which began in 2017, is essentially a payroll tax on large employers that generates around £3 billion a year to fund the whole apprenticeship system. Because employers are now funding the apprenticeship system, the previous government allowed employers to decide what counts as an ‘apprenticeship’.

Some employers approached this in the right spirit and designed high-quality training courses for young people. However, other employers abused this opportunity by rebadging management training courses such as MBAs and other professional development programmes for (often highly paid) existing employees as an ‘apprenticeship’.

We have also seen employers rebadging their graduate recruitment programmes as ‘apprenticeships’ for the same reason. This situation has got so bad that the ‘apprenticeship’ which has received more money than any other apprenticeship over the last seven years is called an ‘Accountancy or Taxation Professional’, which absurdly claims to encompass roles as diverse as accountants, tax advisers, auditors, management consultants and business advisors within one training course – at a cost of up to £21,000 per apprentice. I can think of a lot better uses for that money.

Those are just some examples of the cynical behaviour that has taken hold under the levy system. Since 2017, around 10 per cent of all apprenticeship levy funding – roughly £300 million a year – has been consumed by these deliberately mislabelled courses (technically known as ‘Level 7’ programmes, as they are equivalent to a Master’s degree).

In his speech to the Labour Party conference on Tuesday, Prime Minister Keir Starmer announced that in future, businesses will be expected to fund more of these Level 7 courses themselves. While we still await the full details, it should free up some apprenticeship funding that can be redirected towards young people looking to get started in their career rather than wasting hundreds of millions by sending existing employees – some of them with years of workplace experience already - on extra training courses. There is more work to be done, but this is at least a start.

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Tom Richmond is the founder and director of the EDSK think tank.

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