Jonathan Fitchew, CEO and Founder of training and recruitment specialist Pareto Law, explores recent survery results that indicate more businesses are seeing the benefits of the Apprenticeship Levy. He argues that those companies who have not yet signed up are missing a great opportunity – which their competitors are harnessing – to upskill their people and boost productivity.

If the government’s much-touted Apprenticeship Levy got off to a slow start – beset by scepticism and initial reluctance from many businesses and leaders – it’s now giving its critics a run for their money. Uptake of apprenticeship training among businesses has increased significantly and senior business figures are now lauding the way it’s helping to transform their companies.

Introduced in April 2017, the levy sees all companies with a payroll in excess of £3m per annum contribute an additional 0.5% of their wage bill into a personal fund aimed at providing apprenticeships and training in their business. The government then tops up that fund by an extra 10%.

Companies with a payroll below this threshold can also apply for government-backed funding, with the firms having to pay just 10% of the training costs. The government makes up the other 90% up to a funding band maximum. The money is placed into a special account to be used solely for training apprentices.

Yet this isn’t like the apprenticeship schemes of the past. The funding isn’t just for new starters but also for graduates and existing staff members who want to upskill.

Many businesses are now warming to the Apprenticeship Levy

The key business decision makers who were initially slow to embrace the levy cited issues around insufficient information about the scheme, the initial costs to their businesses and their own ability to train a large influx of apprentices. Many have since come to appreciate the levy’s strengths and its transformative effect on training opportunities for staff both new and old.

This positivity is reflected strongly in the results of a survey we conducted, in which 300 key decision makers were asked a range of questions about whether companies saw the apprenticeship levy as worthwhile, what benefits they saw in it and how they were planning to use it to bolster training.

Sales development and sales training are seen as a great way to get a solid return on investment for money paid into the levy.

Many businesses are yet to open the special account required to receive their funds and with funds expiring after 24 months, an estimated £1.2bn could be lost in the scheme’s first year. That’s 8,650 of around 19,150 levy-paying businesses missing out on funds they’re contributing, which could be used for key training needs.

Our data may convince many of those stragglers to address this. Among the key takeaways is the fact that 70% of those surveyed cited a boost in company productivity as a direct result of training and apprenticeship schemes, with 65% saying that company revenue has been enhanced by the new apprenticeships.

Overall good feeling about the levy is even higher, with 76% saying that the levy is positive for business and only 9% stating the opposite.

Combined with Department of Education figures, which saw a 424% jump in higher or degree-level apprenticeships in September 2017, it shows clearly that many businesses are already benefiting from the levy. But others remain in danger of being left behind.

It’s not just about hard skills...

One of the major benefits of the scheme – again reflected in the responses we received – is that the fund isn’t being used purely for training new arrivals. While the levy can be used to help graduates bridge the skills gap when moving into business fresh from university, it can also be invaluable in upskilling existing staff members.

Training can be focused on hard skills and technical training but funding is also being used to enhance soft skills that many companies have come to value in their staff, including communication, critical thinking, confidence, time management and problem solving.

For companies paying the levy but not utilising the fund, the message is clear – your competitors are already upskilling their staff with it and you should be too.

Business leaders are seeing particular value in training that is sales led. Sales development and sales training are seen as a great way to get a solid return on investment for money paid into the levy.

However, short-term ROI isn’t the sole consideration or even the main benefit – there’s also a knock-on effect in terms of staff morale and company culture. 40% of decision-makers said that training investment made staff feel more valued and 35% said it fostered a more motivated and committed workforce.

Training isn’t just about honing skills, it has other positive side effects that can spread throughout a company.

Don’t miss out...

The picture is clear – businesses are already starting to see the benefit of the Apprenticeship Levy. Many are already using it to train their staff and put in place plans for graduate recruitment that will benefit their businesses for years to come.

Numerous companies have launched new training schemes targeted at specific business needs, making spending levy funds easier. These training providers have helped companies embrace the levy, address skills gaps and take a fresh view of team development opportunities.  

For companies paying the levy but not utilising the fund, the message is clear – your competitors are already upskilling their staff with it and you should be too.

It’s definitely ‘use it or lose it’ and, as many business leaders have explored the manifold benefits of the levy and sang its praises in this survey, there’s every chance that some will come to regret this missed opportunity. The Apprenticeship Levy continues to forge a new path in the training and development landscape.