‘Rebadged’ apprenticeships may cost government £600m per year, think tank warns

Baristas and hotel receptionists being classed as apprentices ‘means almost 40 per cent of starts are poor quality’

Employers rebadging low-skilled courses and professional development programmes under the apprenticeship levy could have dramatic financial consequences, a report from independent think tank Reform has today warned.

It said the government could be spending £600m per year on incorrectly labelled training programmes by 2019-20. 

The report, The great training robbery: Assessing the first year of the apprenticeship levy, scrutinises the first year of the apprenticeship levy, marking the latest in a series of concerns over organisations working around it by rebadging existing training courses or funding executive training opportunities

According to the report, ‘mislabelled’ courses, which fail to meet traditional apprenticeship standards, account for nearly 40 per cent of the apprenticeships approved by the government since 2012. Should this trend continue, the report warned, “the government will be spending almost £600m per annum by 2019-20 on training courses that have been incorrectly labelled as ‘apprenticeships’”. 

“At present, the apprenticeship levy is too complicated for employers, focused on too many inappropriate forms of training and as a result is unlikely to deliver value for money,”  Tom Richmond, senior research fellow at Reform, said. 

“The government urgently needs to get rid of these poor-quality apprenticeships to provide more opportunities for young people to train as genuine apprentices while saving hundreds of millions of pounds in the process.”

In March, People Management reported that Deloitte had transferred more than 40 per cent of its 2017 graduate intake into an accountancy/taxation professional level 7 apprenticeship scheme. 

The Reform analysis additionally flagged the redesign of Cranfield University's School of Management’s executive MBA programme to meet the requirements of the senior leader apprenticeship as a key example of what it defines as rebadging. 

The report stated: “Given the 90 per cent subsidy available for any course or programme that is designated as an apprenticeship, even at managerial levels, employers are now actively incentivised to relabel training courses as ‘apprenticeships’ that they previously paid for themselves.”

However, rebadging is not just limited to high-skilled development, as the report suggested that new apprenticeship standards designed by the government were allowing organisations to rebadge low-skilled and low-wage roles as apprenticeships, benefiting from levy funds.

The list of roles eligible to be classed as apprenticeships now includes serving customers in a delicatessen or coffee shop, working on a hotel reception desk, performing basic office administration, and serving food and drink in a restaurant. These apprenticeships all attract funds from the government, which are paid into employers’ digital accounts.

One 12-month apprenticeship advertised with pub chain Greene King, seen by People Management, lists responsibilities that include basic waiting roles such as “serve food at the table”, “serve alcoholic and soft drinks” and maintain “a safe, hygienic and secure working environment”. 

An advertised hospitality team member barista apprenticeship at coffee chain Starbucks requires apprentices to “provide quality beverages” and “collect payment from customers and give the correct change”. 

Greene King said its apprenticeship scheme had won numerous awards. It said it did not offer 'low skilled' work and apprentices enjoyed progression opportunities and the chance to develop further skills.

Apprenticeship standards covering low-skilled training courses, duplicated roles across multiple levels and professional development courses have accounted for 22 per cent of funding attached to the new standards over the past two years, the report said, warning that the financial consequences “must not be underestimated” should the pattern continue. 

However, Becci Newton, associate director at the Institute for Employment Studies, told People Management that the analysis did not include the conditions of levy funding, so did not represent a full picture. 

“The levy only covers the cost of external training provision, so there are few benefits to employers to introduce spurious apprenticeships that don’t involve off-the-job training, although admittedly the extent of off-the-job training required may vary by occupation,” she said. 

“While the ‘policy push’ for apprenticeships to provide routes to associate technical roles (via level 3-7 provision) will undoubtedly prove valuable, some people require provision at a lower level to enable them to enter the labour market.” 

She added that many young people do not thrive in a school-based environment, and needed alternative opportunities to find their feet: “Lower-level apprenticeships may provide a platform for their advancement and progression in work, and perhaps we should reconsider their value in this light [...] A level-2 job requires level-2 skills to perform – it doesn’t mean it requires no skills at all.” 

Reform has called on the government to abandon its target of three million apprenticeship starts by 2020 in favour of focusing on quality, warning that the pressure to create starts will only incentivise businesses to continue patterns of relabelling. 

“The biggest concern is that the target focuses on the quantity of the apprenticeships rather than the quality, so that if employers continue to rebadge existing training courses or low-level courses as apprenticeships, the government can include those in its target, even if they are not high-quality training programmes aimed at supporting young people into skilled jobs and occupations,” Richmond told People Management

“It’s almost encouraging the government not to take a strong view on the quality of apprenticeships, which is something we urgently need if the system is going to be one of the best in the world.” 

A government spokesperson said: “Our reforms have fundamentally changed what apprenticeships are, as we made it a requirement that all apprenticeships must be real paid jobs lasting for a minimum of 12 months, with at least 20 per cent off-the-job training. Quality is at the heart of our reforms, and the apprenticeship levy is an important part of that – creating sustainable investment in skills training.”