Apprenticeship levy will no longer fund MBAs

With funding cuts looming on the horizon, the Institute for Apprenticeships and Technical Education (IfATE) announced the move to remove the MBA apprenticeship from the apprenticeship levy funding scheme – a decision which will be confirmed by the UK government in June. The MBA apprenticeship was included as a part of the level-seven senior leader occupational standard scheme.

This news hardly comes as a surprise, as the inclusion of MBAs as part of the government’s apprenticeship scheme has faced strong criticism from detractors as it consumes a large portion of the apprenticeship levy allocated for workplace training funds.

This report also comes following UK’s education secretary, Gavin Williamson’s ordered review of the level seven senior leader MBA apprenticeship standard.

In a letter to DfE’s Director of Professional & Technical Education for  Institute for Apprenticeships, Jennifer Coupland, Williamson states, “I am unconvinced that having an apprenticeship standard that includes an MBA paid for by the levy is in the spirit of our reformed apprenticeships or provides value for money. I question whether an MBA is an essential regulatory or professional requirement to work in this field of senior leadership. It is of the utmost importance for the integrity of the programme and the apprenticeships brand that each and every standard meets our highest possible expectations.”

The subject of MBA apprenticeships has been at the centre of criticism and controversial headlines upon its introduction.

Educational think tank, EDSK claimed that employers and universities are mislabelling a range of training courses and jobs as apprenticeships to use up funding from the apprenticeship levy provided by the government.

The think tank claims that employers have wasted £1.2bn on “fake apprenticeships”, spending public funds on everything from an “apprenticeship” for CEOs in how to be a “senior leader”, to creating one for people learning to play football.”

MBA apprenticeship funding comes from a levy scheme where employers with annual wage bills above £3 million make a mandatory contribution equivalent to 0.5 per of their payroll.

This levy was introduced in 2017, giving employers control over which qualifications can be classed as apprenticeships. The introduction of the levy has since increased the number of new apprenticeships up to the master’s level.

However, the Office for Standards in Education, Children’s Services and Skills (Ofsted) reported last year that these so called graduate apprenticeships were relabelled as such, from pre-existing graduate schemes.

Amanda Spielman, Ofsted chief inspector questioned the reasoning behind using the apprenticeship levy to fund university degrees that can already be funded through the student loan system.

Spielman questioned the use of the apprenticeship levy at a speech during the 2019 annual apprenticeship conference, “What is of concern is the fact that levy money is not always being spent in the intended way. So, for example, on graduate schemes that are in effect being ’re-packaged’ as apprenticeships.”

Research published on the Early Impact of The Apprenticeship Levy by the Chartered Institute of Personnel and Development (CIPD) conducted during the time of its inception, warned that the levy will not result in an increase in training, whether for practical apprenticeships or for MBAs. The report also contained warnings that many employers will simply use the levy to re-badge existing learning and pass it off as apprenticeship training.

CIPD’s skills advisor Lizzie Crowley warned that “There’s a real risk of abuse to the system and re-badging of existing training schemes internally to reclaim the levy money. The government needs to keep an eye on those types of apprenticeships to ensure they are offering the development planned.”

There are now over 100 universities in England on the register of apprenticeships training providers, and the number of degree apprenticeship programmes has increased, from 1,614 to 7,114 in the first quarter of 2019.

With these recent headlines, the numbers are set to dip, as Emma Hardy Labour’s shadow minister for further education said that degree apprenticeship should only be fully-funded for people aged under 25, those without a first degree and in sectors with skill shortages.

Speaking on day one of FE Week’s sixth Annual Apprenticeships Conference, Hardy said that she supports their expansion at higher education providers across the country, but a decline in opportunities for the “most disadvantaged” needs to be addressed.

“The government’s rushed implementation of the apprenticeship levy has resulted not in an increase in apprenticeship opportunities for the most disadvantaged, but quite the opposite,” she told delegates.

“I believe degree apprenticeships should continue to be fully funded from the levy for people 25 and under, occupations on the shortage occupation list, and adults who do not already have an equivalent qualification.”

Hardy’s proposal came after warnings from the Institute of Apprenticeships and Technical Education and the National Audit Office that the apprenticeship budget is at risk of being overspent as the budget for England is set to be overspent by £0.5 billion this year, rising to £1.5 billion during 2021/22, according to the government agency for apprenticeships.

Hardy also brought up the latest report on the apprenticeship system by former Department for Education adviser Tom Richmond, where he said 23 higher education institutions have developed an apprenticeship which requires a Ph.D., or another level eight qualification, to start.

Hardy said: “Surely this should not be considered an apprenticeship,” and in her opinion, “the government should end the 100% use of the apprenticeship levy for courses equivalent to a master’s degree.”

What does this mean for apprenticeship schemes in the UK?

IfATE, working with a group of employers, Leadership and Management Trailblazer worked together to develop a revamped version of the occupational standard and end-point assessment (EPA) plan without the MBA and have a rather positive take on this development.

IfATE stated that senior leaders in an organisation are not bound by regulatory requirements to hold an MBA qualification.  IfATE added that as such, there is no requirement to be a member of a professional body and an individual would not be significantly disadvantaged in the senior leader job market without this qualification.

The trailblazer has also agreed to revise the occupational standard on this basis, focusing on ensuring that passing the revised end-point assessment will provide all the necessary assurance that full competence will have been achieved.