Revealed: The £1bn apprenticeship rip-off

Exclusive: More than £1bn of taxpayers’ money spent on sending executives and graduates on top-up courses instead of training young apprentices

‘Use of the levy to part-fund MBAs at business schools is only the tip of the iceberg,’ says think tank (Getty)

More than £1bn of taxpayers’ money has been used to fund thousands of courses for top executives and graduates that are equivalent to a master’s degree but badged as apprenticeships, an investigation by The Independent can reveal.

More than 55,000 graduates and executives from hundreds of large companies have received 100 per cent funding to take two postgraduate level apprenticeship standards – the accountancy or taxation professional apprenticeship and the senior leader apprenticeship.

The astonishing £1bn figure for these so-called level 7 courses has been extracted from government data by education think tank EDSK and means that the scale of the scandal of young people losing out as firms use the apprenticeship levy to bankroll training for executives is more than three times worse than previously feared.

The apprenticeship levy is a charge that businesses with annual payrolls over £3m must fork out, paying 0.5 per cent of their wage bill which they can use to recruit and train apprentices, but any levy that remains unspent after 24 months has to be returned to the Treasury as a tax.

Last week The Independent exposed how £300m of levy funding has been used to fund 21,000 senior leader apprenticeships in the five years to August 2022. Of this, £100m of levy funds was used to subsidise high-flyers getting MBA degrees, despite half-hearted government attempts to outlaw this practice two years ago.

But we can now report that an additional £700m of the levy has been used to fully fund more than 34,000 executives and graduates taking the accountancy or taxation professional standard. At £21,000 per enrolment, this is the most expensive apprenticeship on the market.

The London mayor and Ofsted chief have now waded into the controversy, with Sadiq Khan calling the apprenticeship levy an “appalling scheme not fit for purpose”. Amanda Spielman, chief of the education watchdog, said “relabelling management training as apprenticeships is bad practice”.

Anne Longfield, chair of the Commission on Young Lives and a former children’s commissioner for England, said: “Something is going badly wrong when a system designed to boost apprenticeships is instead being gamed to reward those who already have both feet on the ladder.

“If the apprenticeship levy is not meeting the needs of businesses or the young people it is supposed to help succeed, the government should make further reforms and stop these vital funds being siphoned off to subsidise MBAs for well paid executives.”

Senior leader apprenticeships are typically aimed at chief executives, chief financial officers and heads of department. But their gain has come at a cost – as evidenced by a precipitous fall in apprenticeships for the young, with 100,000 fewer under-25s starting apprenticeships today than before the levy was introduced in 2017.

The EDSK report said: “The level 7 ‘accountancy or taxation professional’ standard has consumed more apprenticeship funding over the last five years than any other apprenticeship in England. Since 2017-18, over 34,000 ‘apprentices’ have started this £21,000 course – creating a maximum spend of almost £720m over this period.

“This is around 25 per cent more than the second most expensive ‘apprenticeship’. The ‘senior leader’ standard, with around 21,000 starts over the last five years, has attracted almost £300m of apprenticeship funding since 2017.”

Tom Richmond, director of EDSK, said: “Use of the levy to part-fund MBAs at business schools is enormously frustrating but it is only the tip of the iceberg. Before the levy was introduced, graduates were barred from getting state funding for an apprenticeship on the grounds they had already received thousands of pounds of government support in the form of student loans.

“Since 2017, the business of graduates doing master’s-level courses masquerading as ‘apprenticeships’ has become a booming industry. This situation should never have been allowed to develop to such an extent without being challenged.

“The government should immediately scrap all these fake ‘apprenticeships’ at master’s level, but successive ministers have refused to do so even as young people continue to miss out on apprenticeship opportunities due to a lack of funding.”

Robert Halfon, minister for skills, apprenticeships and higher education, said: “Degree-level apprenticeships are growing in popularity and made up 12 per cent of all starts in the last academic year, but the idea that this is somehow disadvantaging young people is nonsense. Overall, under-25s continue to make up more than half (53 per cent) of all apprenticeship starts, helping people climb the ladder of opportunity.”

London mayor Mr Khan said: “It is appalling that funding which should be helping young people get a decent start in their careers is instead being used to bolster the CVs of privileged executives.

“Ministers must immediately close this loophole, reform the apprenticeship levy which is not fit for purpose and devolve more powers to London, so we can build a local apprenticeship service that works for those who need it most.”

Ofsted chief Ms Spielman added: “I have said before that relabelling management training as apprenticeships, to be paid for by the levy fund, is bad practice. If the levy is used to fund MBAs for top executives, this effectively turns apprenticeships into a staff development programme. It may help fill skill gaps in management but it doesn’t help those at the bottom of the ladder.”