Businesses can use apprenticeship levy funds to invest in executives’ MBAs, government confirms

‘Rebadging’ of training under scrutiny as Deloitte says almost half its graduates are now undertaking apprenticeships 

The way businesses use the apprenticeship levy has come under further scrutiny after the government approved an £18,000 funding allocation for higher-level skills, MBAs and degree apprenticeships.

Skills minister Anne Milton gave final approval for the funding band – which can be used by employers that have had higher-level apprenticeship courses approved by the Department for Education – on 1 March, following an initial approval from the Institute for Apprenticeships in August 2017. 

The move will prove controversial among commentators who have claimed ‘rebadging’ training for existing employees runs counter to the intentions of the levy. And People Management has also learned that one of the UK’s largest graduate employers has rebadged almost half its 2017 graduate intake as ‘apprentices’, allowing it to receive top-ups from the government for their training. 

The apprenticeship levy applies to all UK businesses with an annual payroll bill of more than £3m. Since April 2017, they must pay an levy of 0.5 per cent into a digital account, recouped in training vouchers that are intended to fill skills gaps and provide new routes into the workplace. A target of three million apprenticeship starts by 2020 has been set by the government, and today marks the start of National Apprenticeship Week, which will bring a renewed focus on the topic. 

However, an early assessment report published by the CIPD in January revealed that more than a third of eligible organisations use or plan to use the levy to fund management or leadership training for existing employees. And 46 per cent said they would seek to rebadge graduate-level schemes rather than investing in apprenticeship starts. 

Professional services giant Deloitte has now confirmed that it has transferred “just over 40 per cent” of its 2017 graduate intake into an accountancy/taxation professional Level 7 apprenticeship scheme.

Emma Codd, managing partner for talent at Deloitte, said the apprenticeship levy was “designed to support and provide training for people starting their careers. Graduates on the programme will continue to be fully supported in gaining their professional qualifications. In addition, they will gain a Level 7 apprenticeship – master’s degree level – qualification.” 

Expanding on the reasons for the December change to its graduate professional training scheme, the firm said its programmes were “continuously enhanced”. 

Jeremy Stern, whose son joined Deloitte as a graduate trainee in September 2017, said he had concerns about the move. “In December, he and his cohort were told that they were now going to be put on an Level 7 apprenticeship course,” he told People Management

“Nothing changes for them – just one extra piece of coursework is required, but Deloitte is able to obtain significant funds from the government for people they already employed, who they were already going to train and for whom there is no difference in the outcome.

“Hundreds of recruits are now classified as apprentices. Deloitte was heavily involved in planning the apprentice scheme with the government.”  

Codd added that Deloitte believed the apprenticeship route “provides additional structure to our existing graduate programmes”, with “more emphasis” on skills and behaviours development, and better “support and pastoral care, through regular coaching provided by a combination of Deloitte personnel and our chosen training providers”.

Codd said Deloitte had set up “a very successful Level 4 BrightStart Higher Apprenticeship, developed over the past decade” and it now “offers 370 places to school leavers. We are very proud of this programme and offering the Level 7 accountancy apprenticeship route is the next step.”

Lizzie Crowley, skills adviser at the CIPD, told People Management that employers using the levy to rebadge existing training was a concern. “When the levy gets taken off employers, it becomes public money, and the scrutiny of how that money is being spent is incredibly important. If organisations are using it to subsidise existing activities, that’s a big question mark over the effectiveness of the programme,” she said. 

“The levy was set up to get a boost in overall investment in training but, if it encourages businesses to rebadge existing routes, this adds no additional training to the UK economy and won’t drive up apprenticeship numbers.” 

The Chartered Management Institute (CMI) last week announced that 900 executives from a range of organisations would commence a Senior Leader Master’s Degree Apprenticeship, centred on developing strategic leadership skills for employees moving into senior management roles. 

Barclays Bank in the UK has also announced that it will be offering master’s apprenticeships to invest in the development of employees, including the alumni of its graduate programme, higher apprenticeship alumni and longer-term employees. 

The bank said: Age or social circumstances shouldn’t be a barrier or deciding factor in finding a viable route to employment, and reskilling can be achieved at any age. It’s time for employers to take action to ensure that there is always a way into work, no matter how old you are, and recognise the unique benefits that an older workforce brings.”

Petra Wilson, CMI director of strategy, described the government approval of MBA-level apprenticeship funding as a “breakthrough opportunity” to invest in management, as strong leaders were vital for tackling low productivity and the uncertainties caused by Brexit. 

“Top teams need professional leadership skills to drive business performance and growth. It will also help to challenge snobbery around vocational routes, and can help demonstrate how these new apprenticeships really can provide pathways through to the top,” she said in a statement. 

Tristan Garrick, the CMI’s head of PR and campaigns, told People Management that the move would allow organisations to invest in apprenticeships “at all levels”, with plenty of funding to go around. "Investing in apprenticeships is essential to closing the UK's professional skills gap at every level – particularly in management. The apprenticeship levy has been designed to create a workforce with the world-class skills that employers need to thrive post-Brexit,” he said. 

According to CMI research, nine in 10 managers are in favour of using the levy to fund apprenticeships for people of all ages. 

“Not only does this provide a pathway for school leavers into professional careers, but it also enables them to learn on the job from qualified, experienced leaders,” said Garrick. 

“More than half of management apprentices are under the age of 30 and, with £3bn in available funding every year from 2019, there will be plenty of opportunity for employers to invest in apprenticeships for the next generation of managers and leaders." 

However, experts have questioned the decision to invest levy funds in this way. Allocating apprenticeship funds to senior and executive-level training was challenged at last week’s House of Lords select committee hearing. Lord Forsyth of Drumlean asked if the levy was “really designed to send senior people on MBA courses? Perhaps I’m being naive, but I didn’t think that was its purpose.”

Crowley said that while investment in skills was needed at all levels in the UK, including training for senior members of staff, apprenticeships were not necessarily the correct route to achieve this. “Higher-level apprenticeships can take three to five years to complete, and involve a considerable amount of time off the job – about one day a week for your senior members to actually not do their day job,” she said. 

“Even though there is more flexibility in apprenticeships in the standards and frameworks, they are still not necessarily the most effective tools for delivering that training to senior leaders – often short courses, bespoke and blended learning are the best routes for delivering those skills. Apprenticeships are meant to deliver on the technical skills the economy needs – those technical skills gaps are not about management and leadership issues.” 

As National Apprenticeship Week got underway, the City of London Corporation celebrated breaking its apprenticeship target by achieving 102 starts in the last 12 months. And provider HIT Training last week scooped the national TES Further Education award for its ‘monumental’ hospitality and catering apprenticeships programme. 

The Education and Skills Funding Agency did not respond to People Management’s requests for comment by press time.