The Department for Work and Pensions has announced today that various apprenticeship standards are to be defunded, largely in management-related areas.
It had been on the cards for a while. Since the department assumed responsibility for apprenticeships policy in a somewhat confusing machinery of government shift – and arguably since the Prime Minister pinned his colours to a tertiary participation target focused on young people alone – the policy direction of travel has been squarely on how skills policy can be used to get NEETs back into work.
The announcement puts it bluntly:
Apprenticeship standards that do not meet the country’s skills priorities or take resources away from opportunities for young people and could be better delivered through on the job training will be defunded.
In particular, the big casualties are the level 3 team leader apprenticeship standard, level 5 operations manager, level 5 coaching professional, and level 4 lead practitioner in adult care (this latter standard is not in the management subject area, but still clearly seen as too much about in-work training and leadership rather than an entry route into employment).
Plus, in the move of most interest to the HE sector, the level 6 chartered manager standard, which had almost 3,000 starts in 2024–25, of which just over 2,000 were via a higher education institution.
The chart below shows how apprenticeship starts break down by provider at level 6. Universities in England deliver apprenticeships in all sorts of different subject areas, but as the graphic below shows, for some providers the business and administration subject area – in orange – is pretty significant. Of this, the chartered manager is by far the most important standard, as can be seen in the bottom of half of the chart.
In terms of the portfolio impact, it’s also worth considering today’s move in terms of the recently implemented age restrictions on level 7 apprenticeships, most of which were in the area of business and management.
What’s behind the ban?
There’s no denying that some of the standards to be defunded were becoming extremely popular. To pluck an example out of the air, the Department for Work and Pensions recently awarded a £2.13m contract for the delivery of team leader apprenticeships and operations manager apprenticeships. HMRC is also a fan of those two standards.
And you would have to predict that these kinds of programmes would only see further growth as the impact of forbidding organisations from spending levy receipts on level 7 apprenticeships aged 22 or above kicked in.
While that initial move, announced by the Department for Education last year, was framed in terms of rebalancing apprenticeships back towards new and younger employees, it was wholly predictable that businesses would first scramble for as many new level 7 starts as possible before the axe fell (again to pick an employer at random, DfE awarded contracts for a variety of level 7 apprenticeships shortly before the age restrictions kicked in, including systems thinking, AI, solicitor and digital) and then would likely gravitate towards other standards in management for existing employees.
What comes through in all this, to state the obvious, is that the government’s priorities for how the apprenticeship levy is used do not match up with those of employers. The announcement essentially states that management skills “could be better delivered through on the job training” – which will likely come as a surprise to those who thought that this is what apprenticeships were.
The reasons why higher-level standards have become more popular, and lower-level apprenticeship starts have fallen, are fairly well-rehearsed. These include apprenticeships at higher levels being longer and more expensive, meaning that they allow organisations to fully use up their levy contributions in a more straightforward way, and thus avoid them expiring. Plus plenty of employers – for example the civil service, as we’ve seen above – have a workforce which tends towards professional and already-qualified staff, and so for them the priority is more about how to further upskill existing employees, rather than being particularly motivated to take on more new staff at lower levels.
Driving seat
Labour, especially with DWP in the driving seat, wants to use skills policy to get more young people out of unemployment. Today’s announcement also includes further grants for hiring young people who have been on Universal Credit, and cash incentives for SMEs who take on apprenticeships. It’s clearly a worthy aim, and the new measures might prove effective – but it’s noticeable how much this all seems to be driven by a hunch about what makes labour market sense, and what will serve the economy better. There’s been no formal consultation, no proper policy paper setting out the thinking and the evidence base, and no real engagement with the widely-held view that apprenticeships should be all-age and be led by the preferences of employers.
The apprenticeship levy is getting on for a decade old, and it has become a fixture of the skills landscape. If it didn’t exist, you feel that few political parties in the current environment would be proposing additional taxes on employment – and yet the levy in its current form is largely accepted. Part of the reason is surely that those organisations whose payroll funds it have a sense of ownership and the ability to plot out its use. It remains to be seen what the consequences are for (what we might call) the levy’s social licence of introducing repeated rounds of restrictions and telling employers to fund “on-the-job training” themselves, when they thought they already were.
Labour’s somewhat belated focus on youth unemployment and the jobs market for young people is clearly felt to be both politically and morally necessary. But cutting management apprenticeships has downsides too, even if they clearly lost the battle in the court of public opinion long ago. Whether the two needed to be traded off against each other feels very unclear, especially when levy receipts to the Treasury – rather than the clearly strained apprenticeships budget handed back to DWP – are forecast to continue growing healthily.
Given the much-remarked decline in employer investment in workforce training, it feels hard to celebrate a policy which will contribute to a further drop. For higher education providers who have invested time, effort and money in establishing exactly the kind of employer-engaged, labour market-responsive provision that everyone has been telling them they should go after, it’s all a bit of a kick in the teeth. And it dangles a further question mark over other standards at level 6 where the majority of apprentices are either over 25 or tend to be existing employees.
The apprenticeship levy brings in more revenue for the UK government than is spent each year but that spending in England – £3 billion a year – does involve some redistribution between employers. If all 20,000 levy paying employers had a “fully use up the levy” objective, then, under current arrangements, this would squeeze out funds for tens of thousands of smaller employers. In a way, this has already happened. The 2017 reforms have seen a shift in activity from small firms to larger ones and public sector organisations. The employer control model also gives all the spending power to the current industries rather than future ones. As with HE student loans, the driving logic behind the policy was to use a new tax and an offer to employers (“get back more than you put in”) as a way to meet a balanced budget target. And because it’s a tax, HMRC rules about taxpayer confidentiality mean no-one really knows how public spending on apprenticeships is being used. There is data on training providers, universities and colleges but not on the employers of apprentices.