Defunding level 7: A choice that doesn’t need to be made

Skills – and in particular apprenticeships – are high on the agenda of government. We have had tepid economic growth since the global economic crisis in 2008/2009 – and any politician serious about balancing the country’s books knows that upskilling and reskilling the country’s workforce has to be at the heart of any plans to reverse this. Apprenticeships will, of course, be a major part of that.  I am, therefore, concerned that the abruptly proposed defunding of level 7 programmes will have negative impacts not only on the programmes and learners affected but more broadly on the skills system and the economy as a whole.

Key reforms will improve the system – but at what cost?

It was encouraging to hear the Prime Minister, Sir Keir Starmer, use part of his speech at Labour Party Conference last month to talk the importance of skills and how the government intends to go about improving the apprenticeship system.

Reform of the Apprenticeship Levy has been a long-term aim of the Labour Party, with its manifesto commitment of a new Growth and Skills Levy designed to open up more flexibilities within the system. The package of reforms announced last month will see some key improvements to the system including a review of the 12-month minimum duration. We will also see the introduction of Foundation Apprenticeships, bridging a gap for employers and opening up tens of thousands of opportunities for young people.

With 98% of the apprenticeship budget being spent over the last three years, and inflation pushing up costs, these changes are being funded through a proposal to defund many level 7 apprenticeships. This, I feel, would be a major mistake. Sustained economic growth requires us to invest in tomorrow’s solicitors, clinical practitioners, AI data specialists, town planners and accountants as well as – not instead of – our future care staff, AI experts and green construction workers.

The social impact of defunding level 7 needs closer inspection before proceeding

The social impact of defunding level 7 needs closer inspection before proceeding. Degree apprenticeships at levels 6 and 7 open up career opportunities to a diverse range of people who wouldn’t ordinarily be able to risk taking on huge levels of debt. The National Foundation of Educational Research (NFER) has calculated that 90% of jobs will require higher-level skills – and the NHS Workforce is banking on 20% of nurses to go through the degree apprenticeship route by 2028/29. In his recent article for FE News, Gareth John was kind enough to use my ‘chimney analogy’, that many learners have a pathway to professional competency through sustained progression by starting at lower levels – he points out accountancy is very much one of these professions with 58% accountancy apprentices moving on to higher levels. Defunding level 7 apprentices runs the risk of choking off this route for many.

One of the great strengths of the current system, that we must cherish, is that employers feel ownership and commitment to the programmes they engage in, not because government told them to be interested in them, but because they make sense for them. If government want more SMEs and younger learners to be involved and at lower levels, then they must change the system so that those things make equal sense to employers as well – not forcing it through crude chopping off programmes at the knees almost because employers value them. 

We must be careful this isn’t the thin end of the wedge – a mass defunding of apprenticeship standards at the stroke of a pen in Whitehall sits in direct contradiction of the need for this to be an employer led system. Indeed, a world in which people have different jobs and different training needs across many years of work, means an all-age, all-level system is a necessity, not a nice to have.

Government unnecessarily constrained by its own decision-making

This is a choice the government do not need to be making – the Apprenticeship Levy was set up to see business invest in skills yet not all of it currently is. The levy will raise £4bn this year – but only £2.7bn is allocated to the programme budget in England. With money set aside for Scotland, Wales and Northern Ireland, we know that the Treasury top slices around £800m. That’s money raised for skills, not spent on skills. Ringfencing the levy receipts so that the amount raised is what then gets spent on skills would more than cover the costs savings of defunding vital level 7 programmes.

The disappointing thing is we aren’t talking about a huge amount of money – we believe defunding all level 7 programmes will save a shade over £200m. It’s also a decision that results from short-term government thinking: by introducing foundation apprenticeships, short duration programmes and career boost programmes this will create the financial head room for incentives without needing to ration standards.They just need to let their own reforms work.

It’s vital government ministers and officials – particularly in HM Treasury – act in line with their claim that skills are an investment into the country’s future: a small initial outlay in extra skills spending through their proposed reformed levy will see direct savings to the budget and more widely the country will enter a positive fiscal loop – greater skills means higher productivity, and that will rapidly result in growing GDP and tax receipts.

I urge the Government to trust their own reforms to make programmes for younger people and SMEs more attractive, and to back their own reforms to create the fiscal headroom that means they can continue these vital level 7 programmes that employers have embraced.

By Ben Rowland, CEO at AELP