MPs demand: Cut funding of apprenticeships for City high-flyers

The taxpayer-funded apprenticeships scheme should be overhauled to focus on young people at the start of their careers, instead of millions being spent on courses for senior executives, MPs will warn in the wake of an investigation by The Independent.

We revealed last month that the current system is being “gamed” to help pay for masters courses, with more than £1bn spent to subsidise these studies since 2017, including £100m used to part-fund MBAs for high-flyers.

Official figures show that in 2021-22, almost half (47 per cent) of apprenticeships were begun by people aged 25 and over. And the number of under-25s starting an apprenticeship has plummeted by more than 100,000 since 2016.

A new report, set to be published by the Commons education select committee this week, will say that a greater proportion of apprenticeship funding should go to those who are just starting out in the workforce.

The committee is understood to fear that the increasing number of older people studying for advanced qualifications under the flagship apprenticeship levy scheme risks removing the focus on apprenticeships as a route into work.

A source close to the committee said of the report: “It will say that a greater proportion of apprenticeships should be focused on young people, people at 16 and 18 leaving school, and on entry-level [qualifications].

“More and more apprenticeships have been taken by older people, and there is concern that this could remove the focus on apprenticeships as a route into work – and the first working opportunity that people have.”

Experts told The Independent that until the balance was tilted, “the prospects for young people will continue to look unnecessarily bleak”.

Anne Longfield, the former children’s commissioner for England, said: “As The Independent has exposed, it seems a proportion of this precious funding is not going to those who need it most urgently. Priority should be given to young people at the start of their careers.

“When funding is so tight, those looking for their first step on the ladder should be given the hand up they need to get on and build a career, and not have to potentially miss out because funds are being diverted elsewhere.”

The apprenticeship levy is a charge applicable to businesses with an annual payroll above £3m. These companies must pay 0.5 per cent of their wage bill towards the scheme, and they can use this money to train apprentices. Any money that remains unspent after two years must be returned to the Treasury.

Tom Richmond, the director of education and skills think tank EDSK and a former adviser to government ministers, said: “Even before the pandemic struck, the number of young people starting apprenticeships was in decline, yet the government has turned down every subsequent opportunity to fix this.

“Under the current apprenticeship levy, it is individual employers – not government ministers – who decide where apprenticeship funding is spent. Unless this fundamental problem is addressed, the prospects for young people will continue to look unnecessarily bleak.”

Announced with great fanfare by the chancellor George Osborne in 2015, the apprenticeship levy is a tax on large businesses which is designed to fund training for apprentices.

The Independent revealed that since 2017, £100m of taxpayers’ money has been used to part-fund executive MBAs, despite a government attempt to stamp out the practice two years ago.

When presented with our investigation, Robert Halfon, the minister for skills and apprenticeships, pledged to take “appropriate action if there is evidence that the levy is being spent on ineligible courses, such as to fund an MBA”.

Mr Halfon had previously described the use of apprenticeship funds to pay for MBAs as “gaming the system”.

But the government backtracked on the promised crackdown at the start of this month, saying that the part-funding of MBAs did not merit further investigation.

A Department for Education spokesperson said: “Over half of all apprenticeship starts in 2021/22 were under 25, and we're providing £2.7bn by 2025 to help more businesses create apprenticeship opportunities. Small employers hiring apprentices under 19 get fully funded training costs paid from the levy.

“We are promoting apprenticeships to young people through our Get the Jump campaign, by investing £3.2m a year into our Apprenticeship Support and Knowledge programme, and by working with Ucas to expand their service so students can search and apply for apprenticeships.”