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Firms using apprenticeship levy to fund senior courses hit with new cap

Businesses planning to use the apprenticeship levy to fund executive training courses, such as MBAs and other senior-level training, have been hit by plans for a new cap.

Introduced by the Institute for Apprenticeships, a government agency created by the Department for Education (DfE), the cap means that no more than £18,000 can be spent on master’s-level degree courses.

It’s been around seven months since the levy was introduced. It was aimed at increasing funds available for apprenticeships by having employers with wage bills of over £3m a year contribute to a central pot that is then distributed to fund training schemes as part of the government’s ambitious apprenticeship target.

But this new cap reportedly falls significantly short of the £47,000 average fees charged by the top 14 business schools around the UK, prompting some critics to believe that schools will drop courses that have been developed in compliance with the levy.

Companies that are already signed up to courses of this kind will likely have to find further money to pay for the courses themselves, or remove applicants from them altogether.

This move would be in sharp contrast to the government’s ambition to spur a UK-wide skills boost by supporting businesses to maximise their training opportunities via a fast-tracked apprentice intake. When PSE spoke to DfE skills minister Anne Milton about the levy last month, she described it as a “huge opportunity” for the public and private sectors alike.

“It goes way beyond the opportunity of getting a more skilled workforce,” she told us. “An apprentice of whatever age brings something very different to the workplace, and therefore something very different to an employer and a business. And they have a unique contribution to make in the success of a business.

“They’re often local, they’re often loyal, and they’re often full of innovative ideas which, for an open-minded employer or business, offers a huge opportunity.”

Luke Sibieta, research fellow at the Institute for Fiscal Studies and the Education Policy Institute, also wrote on the subject for the latest issue of PSE. In his article, he explained that despite an increase in the number of apprenticeships that have become available, it is still unclear whether the levy will increase the overall quality of public services.

Other organisations have also been critical of the levy since its introduction, arguing that it is too inflexible as it stands and could push companies to prioritise quantity over quality.

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