Employers urge chancellor to fund master’s level apprenticeships

Plans to defund higher-level apprenticeships will have “unintended consequences” and hit the UK’s growth agenda, hundreds of leading employers have warned.

The chancellor, Rachel Reeves, has been urged to reconsider taking level 7 apprenticeships – equivalent to a master’s degree – out of the new growth and skills levy in a letter signed by more than 600 employer and university representatives.

Prime minister Sir Keir Starmer announced the move earlier this year as part of efforts to rebalance funding towards creating more opportunities for young people.

The current apprenticeship levy – a 0.5 per cent tax on larger employers’ payroll – is being expanded to fund more training opportunities but will concentrate on entry-level posts, Sir Keir indicated, amid fears that too much of the money was being spent on expensive executive education. Instead, employers will be asked to directly fund higher-level training needs.

But it is high-skill occupations that will drive employment and productivity growth, argues the letter, coordinated by representative group University Alliance. Level 7 apprenticeships are “helping to provide the skills needed for occupations in growth-driving sectors”, it adds, and they can “educate and train clinical staff and managers in the NHS”.

Dozens of representatives of NHS trusts and other healthcare bodies are among the signatories to the letter, which has also been sent to the Department for Education and the Department of Health and Social Care.

Representatives of organisations and companies in sectors including engineering, manufacturing, local government and the creative industries are also among those lending their support, alongside lobby groups such as the Confederation of British Industry, the Science Industry Partnership and the Royal Town Planning Institute.

University figures who have signed include Charles Egbu, vice-chancellor of Leeds Trinity University; Chris Day, vice-chancellor of Newcastle University and chair of the Russell Group; Kathryn Mitchell, vice-chancellor of the University of Derby; and Jane Harrington, vice-chancellor of the University of Greenwich.

Ania de Berg, director of apprenticeships at the University of Manchester, said level 7 opportunities had had a “transformative” effect - particularly on the NHS - while Priti Kharbanda, head of apprenticeships at Buckinghamshire New University, warned the move would leave only employers with additional funds able to invest in the leadership skills of their workforce, potentially creating a divide with the public sector. 

The letter points out that Office for Budget Responsibility forecasts predict a £800 million gap between receipts from employer contributions to the levy and the apprenticeship programme budget – which could fund the cost of level 7 apprenticeships three times over – and it calls for these receipts to be “strategically reinvested into the skills system”.

Boosting education and training opportunities for young people needn’t come at the expense of the need to retrain and upskill people already in the workforce, the letter says, adding that “shifting and storing up problems elsewhere in the skills system will not deliver the high-skill, high-productivity workforce the UK needs”.

It says the decision to defund level 7 apprenticeships has “lacked clarity and transparency” and urges the department for education to publish the rationale and evidence base in order for it to be properly analysed by stakeholders.

“We hope you will work with us to look holistically at the potential impacts and unintended consequences of this policy and step in to prevent it slowing down the growth agenda,” the letter concludes.

Vanessa Wilson, the chief executive of University Alliance, said the impact of the policy change would “have far-reaching effects across different industries and unintended consequences for multiple planks of the government’s skills, opportunity and growth agenda”.

She added the letter showed the “strength of feeling from a diverse set of professionals on the same issue is irrefutable”.

tom.williams@timeshighereducation.com