As the amount of Apprenticeship Levy funding spent on generic management apprenticeships reaches an estimated £2bn, Ben Willmott, head of public policy, and Lizzie Crowley, senior skills advisor consider their pros and cons. 

New analysis of official data shows that the amount of Apprenticeship Levy funding spent on management apprenticeships by employers has reached £2bn, suggesting now is an important time to review their impact.

This is particularly the case against a backdrop of rising skills shortages in the economy and the ongoing political debate about the need to wean businesses off immigration and invest in the skills of the UK-born workforce.

To evaluate the pros and cons of management apprenticeships, it is necessary to understand the context for their growth and wider impact on the skills system, beginning with the introduction of the Apprenticeship Levy in April 2017.

The Apprenticeship Levy was introduced to improve the quantity and quality of apprenticeships and reverse the long-term structural decline in workplace training in the UK.

The levy is failing to deliver on its objectives

The evidence to date is that the levy is failing in its original aims. The overall number of apprenticeships is falling, especially with young people, and the decline in workforce training more broadly has also continued.

The drop in apprenticeships for young people is particularly worrying as evidence suggests that they most need and benefit from apprenticeships. Analysis from the Centre for Vocational Education Research shows that people who start their apprenticeship aged 19 to 24 receive a larger salary increase post-completion than individuals who began their apprenticeship when aged over 25.

At the same time, new CIPD research, finds a growing proportion of graduates end up in low-skilled jobs, and a need for more and better vocational routes into employment to provide an alternative to the university route.

Analysis cited by the FT also shows that, since the introduction of the levy, there has been a particularly sharp fall in the number of apprentices in more deprived parts of the country, which suggests the introduction of the levy, alongside other reforms to the apprenticeship system, has undermined apprenticeships as a vehicle for supporting social mobility and leveling up.

Concurrent with these failings has been the rise of generic management apprenticeships, an unintended consequence of the introduction of the levy, as employers have understandably looked for ways to make the most of their levy funding if they struggle to use it for more traditional apprenticeships.

This has often involved effectively rebadging existing professional and executive management development programmes as apprenticeships, in order to enable the cost to be picked up by firms’ levy money.

Management apprenticeship up by 1149%: overall apprenticeships down by 35%

Consequently, since 2017, the number of management apprenticeships has mushroomed, almost exclusively among existing employees, with 90% of management apprentices being undertaken by those aged 25 or above, many of whom are already well qualified and with an established career.  Between 2016/17 and 2020/21 apprenticeship starts in four of the most popular generic management apprenticeships saw growth of 1149%, at a time when overall apprenticeship starts fell by 35%. Over the same period, the pnumber of apprenticeships going to young people aged under 25 has fallen 40%, with an even more severe fall in apprenticeships for those aged under 19, where there has been a 47% drop in numbers.

Proponents of management apprenticeships argue their growth is a positive trend as they are an effective way for organisations to develop the skills of leaders and managers and addressing the UK’s management capability and productivity gap.

There is certainly evidence that efforts to raise the UK’s lackluster productivity growth could be boosted by improvements to management capability across the economy. However, there is a big question mark over the effectiveness of management apprenticeships as a means of achieving this.

Management apprenticeships not the answer to UK’s management capability deficit

Firstly, the proportion of managers developed via a management apprenticeship will only ever represent a tiny fraction of the overall management population. While there has been a proliferation of management apprenticeships in recent years, with around 170,000 managers having studied for a management apprenticeship at level 3 or above over the last five years, this represents less than 2% of the nearly 10 million managers in the UK. Additionally, although it is not possible to quantify it exactly,  hundreds of thousands of employees each year will become managers for the first time.

Furthermore, in many cases, there will be cohorts of management apprenticeships in some larger organisations, which could potentially improve these organisations’ productivity over time, but fails to develop capability across the economy more broadly.

Secondly, management apprenticeships are much more likely to be adopted in larger firms, yet evidence suggests that the biggest productivity deficit in the UK is among smaller firms. Larger organisations are more likely to have the resources to work with apprenticeship standards providers and the capacity to allow managers to spend a day a week in off-the-job training required by a management apprenticeship. Analysis by former Bank of England chief economist Andy Haldane found that the average levels of productivity of small firms employing less than 50 people are around 7% lower than for larger firms. "There is, in particular, a larger lower tail of small companies with low, or even negative, levels of productivity,” he observed, suggesting that this is where efforts to improve firm-level productivity should be focused.

High cost

Another problem is that levy-funded management apprenticeships are an expensive way to develop managers and take up an increasing amount of public skills funding. Funding caps for management apprenticeships range from £22,000 for a Chartered Manager Degree, £14,000 for  Senior Leader apprenticeships, £7,000 for an Operations or Departmental Manager, and £4,500 for  Team Leader/Supervisor apprenticeships.  While it is tricky to put an exact figure on expenditure, previous evidence suggested that most apprenticeships were being agreed at the top of the funding cap, which implies that up to £2 billion could have been spent on just four generic management apprenticeship standards over the last six years¹.

This reduces funding available for apprenticeships to address the rising technical skills shortages, and for high-quality vocational training and employment opportunities for young people as an

The need to boost occupational vocational pathways for young people, particularly in professions that have traditionally not been open to those from economically disadvantaged backgrounds, continues to provide grounds to justify apprenticeships in areas such as finance and marketing.

Apprenticeships in law, accountancy, and marketing, for example, have much more specific technical skill and occupational competence requirements, compared to an apprenticeship in management, which cannot be seen as a standalone occupation.

Low completion rates

As well as being expensive, management apprenticeships are quite rigid forms of development, requiring one day a week off the job training, and are often not the most effective way of training managers. This is reflected by the very high level of non-completions among people taking management apprenticeships. In 2019/20 achievement rates for management apprenticeships stood at 41% for Operations or Department managers, 45% for Team Leader/Supervisors, 62% for degree-level management apprenticeships and 56% for MBA management apprenticeships.  

Better value management training available

Developing managers’ capabilities, particularly people management skills, is critical to employee engagement and wellbeing and to boosting firm-level performance.  However, there are plenty of other more cost-effective and flexible management training courses and qualifications to do this.  For example, a recent report No Train, No Gain cites a 12-month, one evening-a-week course, Level 3 Diploma on the Principles of Leadership and Management which costs £1,300, in contrast to a Level 3 Team Leader Management Apprenticeship that is eligible for a maximum of £4,500 in apprenticeship funding.

Many more traditional apprenticeships designed to develop technical skills will already include at higher levels the development of core management skills, again undermining the need for standalone management apprenticeships for this purpose.

Taken together, the evidence suggests it is hard to argue that management apprenticeships should continue to attract public skills funding via the Apprenticeship Levy at a time when the need to ensure value for money and the impact of skills funding has never been more important. This is reinforced by the fact that management apprenticeships are unique to the UK and have not been adopted by other developed countries that have effective vocational skills systems.

More flexible skills/training levy required

If the Apprenticeship Levy was reformed into a more flexible training levy, employers could use it to develop existing staff through other forms of accredited training and skills development that are more cost-effective and usually much more suitable for existing employees aged 25 and over.

This would remove the employer incentive to develop generic management skills via a management apprenticeship and leave more money to invest in apprenticeships for young people who most need them and in apprenticeships to address key technical skills shortages in the economy.

Local Skills Improvement Plans could decide the type of training and qualifications employers could use with the skills levy funding to ensure it tackles identified local skills shortages and priorities.

Employers could of course still choose to use management apprenticeships if they regarded them as the best way to train their managers and good business investment.

Beyond changes to the levy, there is a case for diverting public skills funding to improve the quality of locally delivered business support services for SMEs to boost their people management and development capability and capacity to engage meaningfully with training providers.   

It is SMEs, especially micro and small firms, that most need and could benefit from support to build their people management and development capability as they have limited knowledge and resources to do this themselves and have the most potential for productivity growth.

Further reading

Lizzie Crowley was quoted in this FT article on this issue. Please be aware that access to this content is subject to subscription charges.

¹ However, the recent tightening up on the funding rules around recognition of prior learning could have acted to bring the cost for some more recent management apprenticeships down slightly.