It's National Apprenticeship Week, a chance to celebrate the impact of apprenticeships. Here we examine changes to the apprenticeship levy and how employers should reconsider its potential to create a more skilled and diverse workforce.

Apprenticeships have been a topic of conversation since their announcement in 2017. Since then, companies have been getting to grips with the levy, what it is, how it effects their company and how to use effectively in their business strategy.

National apprenticeship week will be celebrated this month, and with the publicity attached to the subject, employers are encouraged to think about the future of their talent pool.

Apprenticeships could be the answer to fill the employee shortage.

Also, with Brexit being the subject of the moment, the 2020 skills shortage pending, apprenticeships could be the answer to fill the employee shortage.

Liza Andersin, HR director of findcourses.co.uk, believes it is time to examine the current attitudes towards employee apprenticeships. 

Current effects of the levy

The apprenticeship levy is a UK tax on employers which can be used to fund apprenticeship training. For all employers operating in the UK, the levy has been set at 0.5% of a company’s pay bill, but it only applies to those employers who have an annual wage bill greater than £3 million. This is in order to meet the governments ambitious plan to train three million new apprentices in England by 2020.

As announced on the 1 October 2018, by the Chancellor of the Exchequer Phillip Hammond, there will be an allocation of £90 million for Apprenticeship Levy funding which will come into place next month – two years after the levy was first introduced.

There has been an increase in starters but it’s not on track to reach the three million starter figure of 2020.  

Monthly apprenticeship starts have been under close surveillance since the levy introduction - there have been 166,400 apprenticeship starts reported to date between August 2018 and November 2018 for the 2018/19 academic year.

This compares to 147,300 reported in the equivalent period in 2017/18 according to gov.uk. Evidently there has been an increase in starters but it’s not on track to reach the three million starter figure of 2020. 

Frustration grows

Open University recently conducted research that found two out of five employers want significant changes to the levy. These results are no surprise since more than £3 billion in apprenticeship levy funding in the UK remains unused despite the ongoing support from employers. A significant change is necessary for employers to work together and hire new talent.

The research conducted by The Open University also revealed that employers have earned back just £480 million of the total funding available since May 2017.

Currently only one in five (19%) levy-paying employers have made apprenticeship commitments with many reporting an ongoing frustration with the levy scheme. 

More than £3 billion in apprenticeship levy funding in the UK remains unused.

The lack of consistency from tweaks to the levy system and funding bands is influencing organisations – they are being left unable to make long term and strategic decisions about training and skills. 

The process of developing an apprenticeship strategy can be a lengthy process for employers, with 66% finding the system confusing and as a result over 36% would like more guidance and 35% would like the process simplified. 

Some companies need more support to help them develop their own strategy or access the funding, so they are keen to go ahead but they need changes to happen. 

Many employer’s experience skills shortages, so now is the time to make use of the levy and invest in training to ensure their company stays in line with competitors and remains strong in future.

Current attitudes towards apprenticeships

There is still a misconception that apprenticeships only apply to young people and inexperienced professionals who are just getting started in their careers – when the reality is that apprenticeship programmes are there to support internal workforce development with apprentices being targeted at anyone aged 16 to 65.

We interviewed Elizabeth Curran, owner of Funding Solutions 4 Business ahead of our 2019 Learning and Development Report, she believes that adult apprenticeships still face a branding issue: “The apprenticeship levy and policy supports internal workforce development for employers, but employers still don’t understand the word apprenticeship. The government definitely needs to do more to help people understand it is about learning new skills, regardless of your age.”

Apprenticeship programmes are there to support internal workforce development with apprentices being targeted at anyone aged 16 to 65.

The message to employers should be to engage with apprenticeships at every stage of the recruitment and development process. When recruitment is taking place, think about the job role and whether it could be an apprenticeship. 

The same applies to staff development, consider if an adult apprenticeship could fill the training need to help the individual move into new job roles.

The key message now to companies large and small is that, levy-paying organisation or a non-levy SME, apprenticeships are training programmes and there should be no connotations attached to age, skill gaps or gender.

The attitude is slowly changing amongst big names as findings from our UK L&D Report 2019 show that 90% of market leaders are using levy funds to train apprenticeships.

Why do we need apprenticeships in 2019?

Even though Brexit is on everyone’s mind, the biggest risk companies need to consider is what loss of engagement can do to your talent pipeline. Losing talent costs money and time, and it’s estimated that re-hiring a position can cost a company up to nine months of that position’s salary on top of an average of 28 weeks to get the employee up to speed. 

Employers are beginning to see now more than ever that as well as bringing in new talent and increasing their brand loyalty, apprenticeships can be used to train existing staff, increase their engagement and motivation as well as contribute to staff retention. 

Apprenticeships can be used to train existing staff, increase their engagement and motivation.

Apprenticeships are one way of future proofing the UK workforce, with the skills shortage happening especially in sectors such as construction, the levy should not be looked at as ‘another tax’ but instead as a benefit, attracting new people to join the industry and improve the skills of existing employees. 

Future of employer apprenticeships

The next 18-24 months will see the close tracking of apprenticeship participation figures post reform of the levy. If all promises are kept and arrangements go ahead as scheduled, we are more likely to see an increase in employers willing to take on and nurture apprenticeships. 

Apprentices are set to see an increase of variety, i.e. learning in the form of sponsored apprenticeships, opportunities in oversaturated sectors and degree apprenticeships.