The ?3 billion-a-year apprenticeship levy on larger firms should be extended to cover employer-sponsored degrees, or universities risk losing students as companies respond to the levy by cutting degree spending, according to the author of a Higher Education Policy Institute report.

The report, published on 21 April and written by Dave Phoenix, vice-chancellor of London South Bank University, says that employer-sponsored degrees offer ¡°excellent value for money to taxpayers, who pay much less of the cost [than for traditional degrees], and students, who can emerge with no debt¡±.

Employer-sponsored degrees ¡°should become more central to the future provision of higher education¡±, given ¡°positive implications for both higher education funding and for universities meeting the more explicit needs of industry, not to mention HM Treasury¡±, as well as in flexible technical education for individuals, it says.

Higher and degree apprenticeships ¡°receive subsidies denied to employer-sponsored degrees¡± and the new apprenticeship levy should be extended to these courses, it recommends.

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The levy comes into effect in April 2017 at a rate of 0.5 per cent of an employer¡¯s pay bill and will apply to firms with salary costs above ?3 million, raising an estimated ?3 billion a year by 2019-20 to fund new apprenticeships.

¡®Better for taxpayer and students¡¯

The Hepi report describes employer-sponsored degrees as the original ¡°earn while you learn¡± courses, where employees undertake study on a part-time basis (usually one day a week). It says that there are currently 235,000 such students ¨C equating to 10 per cent of all students at UK universities.

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Professor Phoenix, who is chair of Million+, told Times Higher Education there was a risk that employers could cut back on degree spending in light of the extra money they will be required to allocate for the levy.

This would mean ¡°we end up not with an increase [of numbers of employees in education], but simply a move of activity into a differently named qualification without any real benefit for the individual, the employer, at the heart of it¡±, he said.

This could also deepen the existing collapse in part-time student numbers, which have been hit following the introduction of ?9,000 fees, and ¡°in terms of the people following a part-time route, you could actually see a drop in numbers if the focus goes straight across to apprenticeships¡±, he added.

The report says ¡°reversing the recent decline in part-time student numbers is likely to be one result¡± of extending the apprenticeship levy to employer-sponsored degrees.

It also notes criticisms of some apprenticeship provision, including from Ofsted chief Sir Michael Wilshaw, who said in 2015 that ¡°employers and providers involved in poor quality, low-level apprenticeships are wasting public funds¡±.

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In relation to apprenticeships, the report warns that it is ¡°important for the future of individuals and communities that we provide access to higher-level technical education, not simply training, to ensure the development of lifelong learning¡±.

On funding, the report notes research carried out by London Economics showing that for employer-sponsored degrees, the taxpayer contributes more than ?10,000 less over the duration of a course, while students ¡°benefit to the tune of ?6,552 each¡±.

It adds: ¡°The political debate over the funding of higher education in Britain must move beyond the sterility of student fees to encompass the balance of funding between the beneficiaries.¡±

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Andy Westwood, associate vice-president for public affairs at the University of Manchester and professor of politics and policy at the University of Winchester, who was a member of the 2006 Leitch Review on Skills, said there was ¡°a strong argument¡± about employer-sponsored degrees ¡°offering better productivity returns because some of the learning will be on the job...Underemployment and poor skills utilisation are two significant problems in the current graduate labour market.¡±

Neil Carberry, director for employment and skills at the CBI, said: ¡°To help people succeed in the future, we need to invest in skills, and more and more of these will be at higher levels.

¡°Employer-sponsored degrees can help meet business needs and are one example of the strong and innovative collaboration which takes place between the UK¡¯s world-leading, diverse university sector and businesses of all sizes and sectors.

¡°As this report identifies, to help address skills gaps effectively businesses need the maximum flexibility as to how they can spend the apprenticeship levy ¨C so that it supports meaningful training which leads to great careers.¡±

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john.morgan@tesglobal.com