Employers have spent £1.2bn of apprenticeship levy funding on ‘fake’ apprenticeship courses, an education think tank has warned.
The Runaway training: Why the apprenticeship levy is broken and how to fix it report by EDSK found some employers and universities are “inappropriately labelling” training courses as apprenticeships to access the levy funding “when they are nothing of the sort”.
EDSK said these ‘fake’ apprenticeships account for half of all courses started since the levy was introduced in April 2017 and have been allocated billions in levy funding.
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Under the apprenticeship levy, employers spending more than £3m per year on wages are required to pay funds equivalent to 0.5 per cent of their annual pay bill. This ‘pot’ is set aside to fund the training and development of staff.
If unspent after two years, companies lose this money and it becomes available to smaller businesses. As the levy scheme was introduced in April 2017, the first round of funds expired in May 2019.
Tom Richmond, director of EDSK and a former advisor to ministers at the Department for Education, said the apprenticeship levy has descended into “farce”, despite it being set up with the best intentions.
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“Instead of supporting the government’s efforts to improve technical education for young people, the evidence shows that some employers and universities are abusing the levy by rebadging existing training courses and degrees as ‘apprenticeships’ for their own financial gain,” Richmond said.
The report, authored by Richmond, cited three categories of ‘fake apprenticeships’: schemes for low-skilled and generic roles; management training and professional development courses; and bachelor’s degrees and master’s-level programmes.
EDSK said since 2017, £235m of levy funding has been spent on roles so low-skilled and generic they don’t benefit from training. These include working on a shop checkout, serving drinks in a bar and playing football.
During the same period, £551m was spent on management training and professional development courses, including for HR consultant, retail manager and senior insurance professional roles.
Ben Willmott, head of public policy at the CIPD, said the EDSK report supported CIPD research highlighting levy funding spent on training that would have happened regardless, or on accredditing skills that existing staff already had.
“We have seen evidence of employers directing levy funding for training which has meant apprenticeships have become a proxy of all workplace training,” Willmott said. “The levy as it currently operates has meant too much training is being repackaged as apprenticeships, and I don’t think that is a positive outcome.”
Willmott said CIPD research showed significant employer support for reforming the levy to a more flexible training levy that could be used to fund other forms of accredited training. Over half (53 per cent) of levy-paying employers said they would prefer a training levy which offered them the flexibility to choose where funding was spent, compared to a fifth (17 per cent) who supported the existing levy.
An investigation by the National Audit Office (NAO) into apprenticeships last year found that “some employers use apprenticeships as a substitute for training and development that they would offer without public funding”.
But Niamh Mulholland, director of external affairs at the Chartered Management Institute (CMI), countered the EDSK report’s suggestion that management apprenticeships were ‘fake’.
"The apprenticeship levy is tasked with creating the workforce of the future, and almost all analysis of the needs of the future UK workforce lists good management skills as a key requirement,” Mulholland said. “At CMI, we see the transformational power of these apprenticeships – how they make a real, tangible difference in people's lives up and down the country, giving them the confidence and skills necessary to build and further their careers.”
And Mark Dawe, chief executive of the Association of Employment and Learning Providers (AELP), rejected the report's claim that some schemes for low-skilled roles were not proper apprenticeships. He said the report used "caricatures" which bore “no resemblance to the reality of what is actually being learnt by the apprentice".
To address the rise of ‘fake apprenticeships’, the EDSK report recommended the government introduce a new definition of an ‘apprenticeship’ benchmarked against other leading apprenticeship systems globally. Additionally, EDSK said the apprenticeship levy should be renamed the ‘technical and professional education levy’, with all Bachelor’s degrees and Master’s-level courses labelled as ‘apprenticeships’ excluded from this new levy.
The report also recommended Ofsted be made the sole regulator for any apprenticeships and technical and professional education funded by the new levy, including provision in universities.