End the scandal of using apprenticeship money to pay for high-flying MBAs

Editorial: The government has tried to stop the apprenticeship levy being used for MBAs but companies and business schools have found a way around the ban

The idea of the apprenticeship levy is a good one; it just needs to be implemented correctly (PA)

The abuse of the apprenticeship levy is a case study in how well-meaning government policies can be manipulated. The levy was David Cameron’s policy that came into effect in 2017, applying to companies with annual wage bills over £3m, at a rate of 0.5 per cent. The proceeds have to be used to recruit and train apprentices, with any unspent amount handed over to the Treasury.

Some employers took advantage of poorly drafted legislation to use the levy to pay for Masters of Business Administration courses for existing well-paid executives. Using the levy to pay for MBAs was banned by Gavin Williamson, the education secretary, in 2021, but The Independent’s investigation reveals that some companies have found a way around the ban.

As we report, some business schools have divided their MBAs into two parts, allowing companies to use the levy to train senior executives for most of the course, while providing additional modules, paid for by the candidate or their employer, to complete an MBA qualification.

This is, as Mr Williamson said when he tried to ban the practice two years ago, against the spirit of the programme, which was primarily designed to help young, low-paid workers gain the skills they needed to progress. That aim is still a good one, but it seems that the government has now failed twice to get a grip on the perverse incentives that are bound to occur in schemes such as these.

It was a mistake in the first place to have allowed the levy to be used for a “level 7 senior leader apprenticeship” at all, let alone to have allowed MBAs to be part of it.

Gillian Keegan, the current education secretary, has an advantage over her predecessors (including Mr Williamson) in that she was an apprentice herself at the age of 16 in a car factory in Kirkby. This led to a business career before politics, which means she is well placed to understand both the benefits of good apprenticeship schemes – and the incentives operating on companies that are required to run them.

She and Robert Halfon, the minister for apprenticeships, should scrap the oxymoronic category of “senior leader apprenticeship”, and ensure that the levy scheme benefits those it was originally aimed at. It would be simple enough to put a salary limit on employees entering apprenticeships – and it would be a lot lower than the average £100,000-plus salaries of MBA candidates at Henley and Cranfield business schools.

There should be no half-measures this time, and no loopholes through which employers and business schools can squeeze effortlessly and lawfully. The idea of the apprenticeship levy is a good one. There is a separate problem of low take-up: the original target was to have 600,000 new apprentices a year, while in the last three years – affected by coronavirus lockdowns – numbers have been running at about half that. Even so, it would be worth purging the statistics of bogus apprenticeships to preserve the integrity of those that remain.

The drive to fund apprenticeships for young people and new starters who have not pursued the academic track of A-levels and university is an important strand of Mr Halfon’s long campaign for popular blue-collar Conservatism.

He and Ms Keegan need to act decisively to ensure that it is not derailed by the scandal of highly paid executives using the levy to pay for qualifications that further enhance their own earning power.