Higher hopes (part 1)
Richard Guy looks at how access to apprenticeship funding at higher levels might best be managed.
Following rumours over the past fortnight, late last week it was reported by FE Week that HM Treasury is keen to reduce funding for some higher-level apprenticeships. The argument seems to be that it is not “fair” to fund apprenticeships at Level 6/7 when we do not have enough apprenticeships at levels 2 to 5. The first target for this appears to be the popular Senior Leader apprenticeship, on the basis that many of these apprentices are already high earners and/or have extensive prior qualifications and therefore are not a priority for public funding.
The apprenticeship system should not be an education or social programme funded by the taxpayer - it is an economic skills supply programme funded by employers via the Apprenticeship Levy. Funding decisions should be made on this basis.
This whole area of discussion is also likely to feature as a key debate as Labour develops more detail behind its flagship policy to allow levy-paying employers to use up to 50% of available levy funds to pay for non-apprenticeship training. This would mean that large levy-payers will spend more of their funds, meaning there will be much less money available for apprenticeships delivered by smaller non-levy paying employers. The Government would then need to put more money into the system, raise the rate of the levy (currently 0.5% of payroll costs for large employers), or cut funding to some apprenticeships.
Therefore, both major parties appear likely to cut or restrict some apprenticeships at some point in the future. DfE’s apprenticeship budget has been very nearly fully spent in the past two financial years. However there remains a surplus amount – up to half a billion pounds, or 10-15% of total revenue – generated by the Levy which is not invested either in apprenticeships in England or allocated to the devolved nations. It is unclear how these surplus funds are being used.
Everyone seems to agree that employers are not training enough apprentices at levels 3, 4 and 5. We could be forgiven for wondering why HM Treasury does not first propose policies to grow apprenticeship volumes at these levels? Then, once levy funds are fully spent, there would be a much stronger argument for cutting lower priority apprenticeships. However, HM Treasury seems to be more interested in diverting a slice of Levy proceeds to other uses first.
The problem here is that there remains no concept of the “right” volume of apprenticeships (and at what level) for the skills needs of the economy. The right number is certainly much higher than current volumes but both the Government and Labour need research urgently to look at this, sector by sector to provide the basis of a skills/apprenticeship strategy from at least level 3 upwards. This could consider skills requirements at levels 6/7 and the skills supply supported from HE budgets (primarily student loans), noting that much of this investment via mainstream HE provision does not readily convert into economic benefit. But such research would help current and future Governments make better informed decisions about the role that higher and degree apprenticeships should play in meeting our economy’s higher skills needs.
In my next blog, I will set out in more detail some of the challenges around funding higher and degree apprenticeships and the need for a proper strategy in response. This would help to avoid a scenario whereby short-term decision-making by HM Treasury – be it driven by political signalling or simply to save some money here and there – proceeds in piecemeal fashion as apprenticeship funding comes under more pressure. The result would be layer upon layer of even more complex funding policy based on cutting those apprenticeships some people or politicians do not like the look of.