We must face up to the trade-offs needed to expand apprenticeships

When it comes to UK higher education policy, one area seemingly dominates the imagination of the Labour and Conservative parties alike – degree apprenticeships.

Earlier this month, Sir Keir Starmer launched Labour’s education “mission”. Alongside proposals for early years and school education, Starmer promised to “provide pathways to good prospects for all” – expanding high-quality education, employment and training routes and turning the “failed apprenticeships levy into a Growth and Skills Levy”.

And for the Conservatives, Gillian Keegan, secretary of state for education, last month used her speech at the Northern Powerhouse Education, Employment and Skills Summit at Sheffield Hallam University to talk almost entirely about apprenticeships and the need to increase uptake by ensuring that more students, employers and parents understand the benefits of these non-traditional routes. Indeed, higher education minister Robert Halfon has described “degree” and “apprenticeship” as the two most wonderful words in the English language.

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As one of the largest providers of degree apprenticeships, with more than 2,700 apprentices working across 35 different programmes with over 640 employers, we at Sheffield Hallam watch these policy deliberations closely. And, unsurprisingly, we have some views about what works and what doesn’t.

Much debate is centred around the apprenticeship levy. Labour says this needs to be more flexible so it can be used on a greater range of training courses in demand from business. But while it is true that in the early years there was a £3.5 billion levy underspend, that figure has shrunk dramatically as understanding of the levy has grown and trust in the market has been established. In 2021-22 just £11 million was returned to the Treasury, with 99.6 per cent of the allocated budget being used by employers.

At present, the larger firms that pay the levy spend 55.5 per cent of their fund on apprenticeships for their own workers, with the remainder being used to fund apprenticeships at smaller companies, which don’t pay the levy. While almost no one would argue for rigidity, the risk of “greater flexibility” is that the levy would be used for lower-quality training. This would undermine the move towards a national vocational standards framework and underfund the growing demand for degree apprenticeships that both parties are keen to encourage.

Our message is to hold the policy line. The levy has taken time to bed in, but it would be premature to tear it up and start again, especially now that more employers are embracing it and using it to drive higher skills – which drive higher productivity. Funding arrangements need to remain stable and reflect the genuine cost of ensuring high quality and prestige, with parity of esteem to degrees.

One improvement, though, would be a specific incentive for universities to work with small firms. It’s well known that establishing degree apprenticeships with SMEs is a challenge for both universities and the firms themselves, which are often working on narrow margins. A working definition of a small firm is one that has as many things to do as a big firm, but fewer people to do them – so additional investment is needed to make a success of degree apprenticeships in these environments.

The investment would be worth it. In South Yorkshire, 87 per cent of companies have fewer than five employees, and the productivity benefits of building skills in small firms are powerful. A shared apprenticeship scheme could help connect SMEs with larger employers and universities, simplifying their apprenticeship administrative requirements and giving the apprentices access to a wider pool of support and a greater range of experiences. Additionally, an SME funding multiplier could enable providers to draw down increased funding from the Education and Skills Funding Agency, depending on the number of employers they work with.

Regulation policy and measures to reduce bureaucracy may not be sexy, but they are also important. Labour proposes a new agency, Skills England, “to give coherence and direction to our skills landscape”. The party insists this will “not replicate existing functions”, but it’s hard to see how another regulatory agency will reduce bureaucracy rather than add to it. In our experience, the Institute for Apprenticeships and Technical Education (IfATE) has done impressive work in articulating routes through technical education and working with providers. That’s the right direction of travel and support for it should be expanded, not duplicated.

Less regulatory bureaucracy would better enable a focus on innovation and quality. This could be achieved through greater flexibility around evidencing of functional skills. Many higher-level apprentices are forced to undertake additional, state-funded study at level 2 despite holding higher-level qualifications. This clumsy policy impacts on experience and perception of degree apprenticeships.

Regarding assessment oversight, Ofsted isn’t perfect, but it does work. Again, reform is the sensible way forward. Ofsted should create a specific higher education team, and inspections could be reframed to more openly encourage innovation and to acknowledge universities’ specific approaches, structures and business models, without compromising quality.

We welcome the focus of both main parties on growing skills, expanding opportunities and delivering different pathways to success. But we have to be honest about the trade-offs this requires. Degree apprenticeships are more costly than conventional undergraduate education to deliver, in a sector constrained by an unsustainable funding model that is unlikely to change for the foreseeable future. All the more reason for policy to be grounded in the experience of providers if we are to deliver for learners, employers and the UK economy.

Sir Chris Husbands is vice-chancellor and Natalie Day is head of policy and strategy at Sheffield Hallam University.