The government will clamp down on misuse of the apprenticeship levy on self-funded MBAs

The government has agreed to take action to stamp out the misuse of apprenticeship levy funds to subsidize “ineligible MBA courses” for top executives, following an investigation by The independent.

Skills and apprenticeships minister Robert Halfon’s meltdown comes ahead of his appearance before the cross-party Commons education committee, where he is expected to face questions about young people being overlooked as apprenticeships money is spent on high-flyer courses.

The minister had initially insisted, in the wake of our reports earlier this month, that levy funds “cannot be used to get MBAs”, despite evidence that courses continue to be subsidized following a government crackdown two years ago. Up to £100 million has been spent on part-funding courses over the past five years.

But then The independent sent the Department for Education (DfE) verbatim examples of how universities appear to be gaming the system by promoting their MBAs to prospective candidates as “partly funded” by the levy, the minister has vowed to crack down on abuse of the system.

Mr Halfon said: “If there is evidence that the levy is being spent on ineligible courses, such as to fund an MBA, we will take appropriate action.”

In examples sent to the DfE, Loughborough University boasts on its website: “The 3-year Loughborough Executive MBA is designed to also meet the requirements of the Level 7 Senior Leadership Apprenticeship”, adding that “this enables applicants and to their employers to use the Apprenticeship Levy to part-fund the MBA programme’.

Cranfield University, too, says: “This [web] The page is aimed at students looking for a Senior Leader Apprenticeship + Executive MBA through the Apprenticeship Fee. Eligible organizations can use their apprenticeship fee to cover Part 1 of the program fees.’

Sources close to the DfE said there was an acknowledgment that our research had raised valid points about the use of the levy to part-fund MBAs and the overlap of content between the MBA standard and the Senior Leader Apprenticeship.

The DfE also accepted, sources said, that it needed to be more transparent about apprenticeship levy data so the public could see where the money was being spent.

The Apprenticeship Levy is a charge paid by businesses with annual wages of more than £3m, which must pay more than 0.5 per cent of their wage bill, which they can use to train apprentices. Any levy that remains unused after 24 months must be returned to the Exchequer as tax.

Our investigation has revealed that more than £1bn of taxpayers’ money has been used over the past five years to fund 55,000 already highly paid executives to take two Level 7 courses which are equivalent to a Masters but are classed as ‘apprenticeships’. .

We also revealed that £100m of this went towards MBA funding, much of it for executives earning more than £100,000 a year – despite the government’s attempt to stamp it out two years ago.

The rise in management apprenticeships appears to be at the cost of young people with 100,000 fewer under-25s starting apprenticeships than before the levy began six years ago.

Robin Walker, chair of the public education committee and Conservative MP, said: “I’m in favor of employers investing in apprenticeships at every level and developing apprenticeships at higher level and even degree level is good.

“However, it is worrying to see the levy being used to support already high-profile high-income executives. The levy was intended to support people entering the workforce through a combination of earning and learning and should be used to support people who did not have the opportunity to obtain degrees. Ministers talked about a ladder of opportunity and it is vital that a significant proportion of levy funding is focused on the first steps on that ladder.”

Jeremy Hunt is also under pressure to review the levy in this week’s spring budget following a call from the cabinet minister who introduced it in 2017. Justine Greening, along with eight business leaders and former skills secretary Anne Milton, wrote to the chancellor saying the levy “will not raise Britain’s standard” without serious reform.

We’ve also reported how former education secretaries across the political divide, Gavin Williamson and Alan Johnson, have called on ministers to reform the levy system. And we reported similar calls from London Mayor Sadiq Khan, Ofsted chief Amanda Spielman, former Children’s Commissioner for England Anne Longfield and high street CEOs Ken Murphy of Tesco and Mark Constantine of Lush.

Today, we can report further criticism of the use of the levy from industry representatives, think tanks and a former university boss.

Lemn Sissay, former chancellor of the University of Manchester and currently honorary chair in creative writing, asked: “Millions of pounds of taxpayers’ money being used to part-fund university courses for executives earning more than £100,000 a year? Isn’t this institutional corruption?”

He added: “We did not come out of the pandemic to deprive new entrants of the labor market of capital. The executive grant does not serve this fund. This abuse of the levy must stop now.”

Industry bodies and think tanks also pitched in. Kate Nicholls, chief executive of advocacy group UK Hospitality, said: “Reform of the apprenticeship levy is urgently needed. A much-needed overhaul of the system would allow businesses to go even further in their investment in skills. I call on the chancellor to commit to reforming the levy in the next budget.”

Julian David, chief executive of technology trade association techUK, said: “There has been a lot of controversy about the levy, mainly being used to fund MBAs. The solution is to review and reform the levy. Now is the time for a complete overhaul.”

Lizzie Crowley, from the Chartered Institute of Staffing and Development, said: “Using apprenticeship levy funds to pay for MBAs for senior executives is clearly not a good use of public funds – but more than that, it diverts opportunities away from too many people who would system is designed to support. This highlights the urgent need to reform the system to ensure young people do not continue to miss out.”

Shazia Ejaz, director of the Confederation of Recruitment and Employment, said: “Most businesses agree that the apprenticeship levy has not worked. The use of the MBA is further evidence of this.”

Think tank boss Stephen Evans, chief executive of the Learning & Work Institute, said: “The current apprenticeship levy can’t pay for everything, so we need to agree how to prioritize limited investment – which would certainly involve more young people starting a career. and less for MBAs for well-paid executives.”

A spokesperson for Cranfield University said: “Cranfield University provides a successful and well-established Senior Leaders Apprenticeship program in accordance with the Government’s strict apprenticeship funding rules.

“We offer people moving into senior roles in the public and private sectors an opportunity to develop their skills. For many this is the first time they are studying for a formal qualification. Those who successfully complete the SLA have the opportunity to study other Masters qualifications, including the Executive MBA, at an additional cost.”

Loughborough University declined to comment.