Earlier this month the Government released long-awaited further proposals for the Apprenticeship Levy, and confirmed that it will be implemented in April 2017. Whilst this has provided some useful further insight for business leaders, many are anxious to see what impact the Apprenticeship Levy will have on them.

Employers with a paybill of £3 million and more will pay 0.5% of their paybill, with a £15,000 allowance, so most small and medium sized businesses will not have to pay the levy. Still, as the funds provided to employers have to be used within 18 months, many employers want quick answers as to how to use them as efficiently as possible when buying apprenticeship training.

The new details provided in the most recent Apprenticeship Levy proposals included numerous different funding bands for apprenticeship qualifications. These bands set out the top levels of funding a company can receive from the Government for providing a single apprenticeship. These can range in cost from £3000 to £27,000 for top level apprenticeship frameworks. However, once a business receives this funding, it still faces the tricky choice of finding the right candidate to hire and train. Employers take a leap of faith when hiring a young person, as there is no guarantee they will add to company productivity, or even last the full length of the apprenticeship course.

Early steps

The charity I founded, Believe in Young People (BiYP), has a solution to this problem. We bring employers and educators together to prepare and place young people, from Year 7 onwards, into the world of work. We do this by taking each young person step-by-step through their own personal journey to gain the knowledge and experience they need to enter the workplace, through offering: employer-led resources and guidance which is integrated into the curriculum; employer school visits; and structuredwork experience placements.

After they have improved their employability skills and behaviours, we help support our students to successfully apply for an apprenticeship; supporting them throughout the entire journey, from learning to earning. This offers employers a pipeline of high quality and experienced candidates for their future employment needs. 

The importance of having work-ready apprentices should not be underestimated. With the right pre-employment experience, young people who enter businesses as apprentices can add value from day one. BiYP has found that apprentices who have had meaningful work experience beforehand are more productive and have higher retention rates than those have not had a chance to gain first-hand experience in the workplace. We have found that in some cases employers can save up to 80% on recruitment costs by hiring BiYP students. This represents and incredible opportunity for employers to make the most of their funds, and ensure they take on motivated and skilled apprentices in the process.

Cost effective solutions

BiYP are currently running an Apprenticeship Levy Pilot, which will measure the number of young people successfully transitioning into an apprenticeship upon completion of our pre-employment programme.

The process will provide hard data for business leaders looking to get the best value from their Levy funds, and give an insight into key details such as the financial feasibility of the Levy, and the improvements in apprentice productivity levels versus the standard route into apprenticeships. This information is likely to be in high demand, as currently some employers may not even be sure how many apprentices they can employ using the Levy funds available to them.

Employers unsure about the practical ramifications of the Levy should take heart in the fact that there are cost effective ways of hiring high quality, reliable apprentices. Getting smart about how to use the funds available will allow businesses to not only take full advantage of the Levy funds, but also make savings to training and development overheads. Finally, the positive impact on the bottom line will also be easy to measure, as young people with meaningful work experience behind them are productive from day one.