Take degree apprenticeships out of levy funding, says Willetts

Degree apprenticeships should be taken out of the apprenticeship levy and funded via fees and loans like other forms of higher education, according to a former universities minister.

Lord Willetts told the Conservative Party conference that the “very expensive” provision – that combines on-the-job training with degree-level teaching – was skewing the available opportunities for young people.

He was speaking after the new Labour government announced a “rebalancing” of funding via its expanded growth and skills levy that will use money collected from large employers to pay for training opportunities.

Prime minister Sir Keir Starmer announced last week that businesses would be encouraged to fund level 7 apprenticeships – equivalent to a master’s level degree – themselves while the levy would help pay for opportunities at lower levels.

Another former universities minister, Robert Halfon, warned against such a move in his own appearance at the conference, saying that it threatened to undermine degree apprenticeship provision.

“Once you come for level 7, then they will come for the level 6 apprenticeships which would destroy degree apprenticeships,” he said.

“If you start messing around with it too much, you end up with a mishmash and have less apprentices.”

He said more than 100 universities were involved in offering level 7 apprenticeships and they were “very important courses” because they allowed adults to retrain and learn new skills, “not just in leadership and management”.

Instead, Mr Halfon said, the government should look to introduce a skills tax credit that could reward businesses that invest in skills programmes.

Lord Willetts appeared to signal a different approach. He said that the party’s previous position on higher education had been to be very supportive of apprenticeships and wary of expanding university places.

But it had faced a “paradox” in that it had presided over shrinking apprenticeship participation and an expansion in the number of students going to university during its time in office.

To reverse the decline in the number of young people taking apprenticeships, “degree apprenticeships should not be a charge on the levy, they should be financed out of fees and loans just like other forms of higher education”, Lord Willetts told the conference.

“If you can persuade the party it needs to do that as a pro-apprenticeship measure, you then have the next consequence which is instead of badmouthing fees and loans as a horrible system…you start making the case for this system because it is the way in which degree apprenticeships are funded.”

Speaking alongside Mr Halfon, Paddy Craven, director of policy, strategic partnerships and stakeholder engagement at City & Guilds, said he welcomed some of the rebalancing because “apprenticeships should be at their heart supporting young people into really high-quality jobs and that part of the system is not working quite as well”.

He pointed out that the recent pay rises across the public and private sectors would result in increased funds raised by the levy as employers pay 0.5 per cent of their entire pay bill towards it. 

Mr Craven said, should this be transferred to the apprenticeship budget, it may reduce the “robbing Peter to pay Paul” dynamic of having to shift funding from one area to pay for another.

tom.williams@timeshighereducation.com