After the Demise of Level 7 Apprenticeships, What Next?

Last month, through a detailed written statement, Bridget Phillipson confirmed that Level 7 (master’s level) apprenticeships will no longer be funded. Despite months of intensive lobbying against this decision, the only concession is that 16-21 year olds will still be eligible, and there is at least a welcome pause for providers and employers to regroup, since the axe won’t fall until January 2026. In 2022/23 under 22s made up only 2,710, or 11.4% of L7 starts, so the vast majority, just under 24,000, will disappear.

In support of her decision, the Education Secretary accepted that these qualifications were an important contribution to meeting skills needs, but argued that alternative routes are “well supplied” and that therefore the impact would be minimal, or in her carefully crafted words, “there is unlikely to be a significant or unavoidable fall in the supply of these skills long term.” We shall see. It’s unclear what “alternative routes” she had in mind, other than employers directly funding staff or supporting them to take out student loans on an individual basis. Whatever the case, the decision has the benefit at least of being clear and unambiguous. But what are its wider implications?

Severe Pressure On The Overall Apprenticeship Budget

First and foremost, it’s an indication of the severe pressure on the overall apprenticeship budget, which despite a recent 8.5% increase to over £3 billion a year, is at risk of running out. The main reason for this is the rapid expansion of degree apprenticeships over the past few years, which have been absorbing an increasing proportion of the available budget. Apprenticeship funding seems set to be a zero sum game, with any expansion in one area needing to be paid for by reduction in another. Unless the rate at which employers are charged is raised, or the number of eligible employers is increased by applying the levy to smaller companies, both moves likely to be extremely unpopular with employers, the levy pot can’t stretch much further.

DfE’s Determination To Prioritise Younger Learners On Lower Level Apprenticeships

Secondly, it’s further evidence of the DfE’s determination to prioritise younger learners on lower level apprenticeships, as initiatives such as the introduction of Foundation Apprenticeships have signalled. There’s a strong argument that this should be a vital route into early careers for many young people, and most apprenticeship systems around the world operate on this basis. Although the Skills Minister has repeatedly stated her support for degree apprenticeships, it would be no surprise if further kerbs were introduced, for example requiring apprentices at this level to take out student loans to cover all or part of the cost, if the budget continues to be overstretched. Much depends on how successful the government is at reviving Level 2 and 3 apprenticeships, and this will require overcoming the reluctance of small employers – the hairdressers, vehicle workshops and local construction companies that traditionally provided the bulk of opportunities for school leavers. Low funding rates, dense bureaucracy and the increased cost of taking on staff are well documented as the significant barriers here, and there is no sign yet of any direct solutions being found to tackle these issues.

This Restriction Will Reinforce The View Of Many That The Levy Is No More Than An Extra Tax On Employers

Thirdly, since the levy system by design incentivises employers to use degree apprenticeships to spend their levy allocation, this restriction will reinforce the view of many that the levy is no more than an extra tax on employers, and is hardly likely to encourage them to invest more in training. As the Learning and Work Institute and others have reminded us regularly, the level of UK employer investment in training has fallen to a point where it’s now well behind that of other countries. Unless the new more flexible Growth and Skills Levy offers alternatives that can be used by employers to provide the sort of high-level training they need, the danger is that they will spend even less on training, rather than more. So far, little has emerged from Skills England about what alternatives they will be prepared to fund.

So where does this leave lifelong education?

So where does this leave lifelong education? Already squeezed by the 87% of the DfE’s annual budget spent on compulsory education, there’s little left over for adult learning, and the Level 7 decision removes another slice of the pie. All observers agree that finding ways to raise the skills of working adults is vital to improve the nation’s economic growth and productivity, but we are alarmingly short of new ideas to encourage this. The only new opportunity in town is the long-awaited Lifelong Learning Entitlement, now due to launch in 2026/27, which colleges and universities across England are gearing up to take advantage of. But the big question is what demand there will be for the LLE, as all the evidence is that working adults, particularly those on low incomes, are understandably reluctant to take on further financial commitments such as student loans.

Adult Skills Accounts

The frontline in this battle is local. Strategic Authorities new and old will have to find innovative ways to stretch a diminishing adult skills budget to meet the needs of local communities. The Lifelong Education Institute has long argued that the introduction of Adult Skills Accounts, through which individuals, employers and government share the costs of training, is the most promising mechanism for expanding provision for all kinds of adult learner, as outlined in the report “Making Lifelong Education Work: Skills Accounts for Bite-Size Learning”. It could be used by local authorities in combination with the LLE and other funding sources to create an inclusive and affordable offer for hard-pressed working adults.

Lifelong Education, so important for individual careers prospects and collective economic health, needs new thinking if it is to make progress. This will require supportive policies at national level, but crucially will need devolved authorities to find new ways of meeting needs. If this can be done successfully, we may not miss Level 7 apprenticeships, and the government’s confident prediction that other ways will be found to meet the demand for skills will prove to be right. Let’s hope so.

By Andy Forbes, Executive Director, Lifelong Education Institute