Employers outraged as Institute for Apprenticeships threatens crippling cuts to apprenticeship funding

Within less than a week, more than 152 employers* including leading advocates for apprenticeships, and over 285 management apprentices have signed the Trailblazer Group’s appeal to present to Ministers at the Department for Education to reject the latest proposals by the Institute of Apprenticeships to introduce huge cuts to the funding bands of the most popular management apprenticeships.

With the Government already admitting that it will struggle to meet its target of 3m apprenticeships and its stated commitment to focus on high quality new programmes, supporters believe that these cuts will completely undermine the quality and early employer investment in these successful programmes.

Following a deeply flawed funding review process, the IfA has proposed reducing the funding bands for the most popular management apprenticeships as follows:

Chartered Manager Degree Apprenticeship – from £27,000 to £22,000

Operations Manager Apprenticeship (Level 5) – from £9,000 to £7,000

Team Leader Apprenticeship (Level 3) – from £5,000 to £4,500

According to the evidence submitted by employers and providers as part of the review process, these cuts would irrevocably damage the quality, reputation and volume of management apprenticeships. Many universities and high-quality providers will exit the market, and the more intensive programmes that support young people and drive social mobility will be hit hardest.

The Trailblazer Group is currently appealing the decision on the grounds that it was not a fair and transparent process, with unrealistic deadlines, incorrect briefing documents and irrelevant information included. Significantly, given ‘value for money’ was a key criteria for the review, employers are concerned that the review has not considered the economic and social impact of these programmes, and is calling for a detailed impact assessment to demonstrate the value and benefits being delivered to the economy.

Anne Thomas, education director at Serco, and one of the employer chairs of the management and leadership trailblazer group, says:

“At Serco we’ve invested significantly in building our apprenticeship programmes and have been hugely supportive of the Government’s apprenticeship agenda. We’re already seeing the benefits of these new programmes and have been working with new, high quality providers to deliver the management skills our business needs. However, these cuts would clearly undermine our future ability to use our Levy on the management skills we need for our future business growth. It also frustrates the hard work of the employer trailblazer group which has invested significant time and resources into developing high quality apprenticeships which will no longer be funded as promised.”

Also by only reviewing 31 of the 566 new Standards, this will significantly distort the apprenticeship market as employers will turn to those Standards which are still being fully funded. It cannot claim that it is creating a ‘fair’ and employer-led system, when its decisions are skewing the market.

According to the latest figures from the Association of Employment and Learning Providers (AELP), out of the £1.39bn Levy raised, only £207m has been withdrawn. Employers are struggling to spend their funds which will start expiring next year, and are now being restricted in how they can use them.

“We are starting to see funding cuts across several of the apprenticeships that we offer including the Chartered Manager Programme. Providers have confirmed that an employer top up may be required to deliver the same quality of provision under the reduced funding bands. This may not be viable for us and subsequently we would need to reconsider offering these programmes. We are incredibly supportive of apprenticeships and are working hard to maximise the levy and support the Government’s agenda, but there comes a point where the costs outweigh the benefits.” Thales UK

The IfA is now claiming that the funding bands only reflect the maximum contribution that Government will make and should not reflect the full cost of the training for an apprenticeship. Yet employers were sold the proposition of a Levy where they could reinvest their levy pot in the apprenticeships they most needed.

Indeed, cutting the funding for these early apprenticeships that are working well for employers and apprentices alike, is seen as completely counter-intuitive.

Reflecting on the comments from employers, Petra Wilton, Director of Strategy, at the CMI said:

“We simply can’t see why Government is shooting one of its most successful policies in the foot. As the overwhelming outcry from employers demonstrates, it makes so little sense. Especially at a time when so many employers are struggling to recruit the highly skilled managers and leaders needed to drive up business growth and employee engagement amidst the challenges of Brexit. However, we are still confident that Ministers, who have been so keen to showcase the early success of these programmes and the new management apprentices, will return from recess and reject this ridiculous decision.”

*Employers include BT, Asda, IBM, Aldi, ODEON, Tesco, Next, Birds Eye.

About CMI: The CMI works with business and education to inspire people to unleash their potential and become skilled, confident and successful managers and leaders. CMI has more than 60,000 people training to be better leaders right now across its partnership network in the UK and internationally.

Backed by a unique Royal Charter, CMI is the only organisation able to award Chartered Manager status – the ultimate management accolade, which is proven to boost individuals’ career prospects, management capability and impact in the workplace.

CMI’s thought leadership, research, events and online resources provide practical insight about critical issues for its 100,000 plus members and any professional looking to improve their results; create diverse high-performing teams and nurture the next generation of managers and leaders.

CMI has created a suite of management apprenticeships with a 40-strong employer group. This includes the flagship Chartered Manager Degree Apprenticeship and the Senior Leader Master’s Degree Apprenticeship for executive and C-suite development. More than 10,000 workers are currently enrolled on management apprenticeships.